Opinion: Is the pullback in the US stock market over?

The answer to the headline is … “maybe.”

However, my expectation is that the downside for stocks hasn’t been completed. At the same time, I have to temper any bearish thoughts with the recognition that this is still a bull market, and we have much higher levels (over 2,500 points) on the SP 500 Index

SPX, +0.52%

to notch in 2017. I hope I have driven this point home enough so people are using pullbacks to focus on the long side of the market, rather than attempt to aggressively short-sell a bull market pullback.

As we came into this past week, we expected to see the market provide us with some downside. Ideally, that downside would be a completed corrective decline, which would target at least the 2,335 SP 500 region. Unfortunately, we missed that target by about 20 points.

In simple terms, the market can still reach my ideal target at the 2,285 level. However, due to the structure developed off the highs, we will first need to break 2,375 early this week, and follow through below 2,335. Failure to break 2,375 early in the week, or a failure to follow through below 2,335 later this week (after breaking 2,375 early in the week) should have you looking much sooner than later toward the 2,500 region on the SP 500, which, as you know, is our next larger target zone.

So please remember that this is still a bull market. And, while we have correctly called for this region to provide us a consolidation back on March 1, the market does not owe us a deeper correction, even though we would prefer it. Rather, we must follow the clues being left to us daily by the market, and adjust accordingly. The market will likely provide a clearer picture soon, centering around the 2,375 region, as noted above, to be potentially followed by a test of 2,335.

See charts illustrating the wave counts on the SP 500.

The writer has no holdings in any securities mentioned.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net, a live trading room featuring intraday market analysis on U.S. indices, stocks, precious metals, energy, forex and more, along with an interactive member-analyst forum and detailed library of Elliott Wave education.

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