In my most recent article on TraderPlanet, I mentioned that the S&P 500 (SPX) was either in a corrective move down and we were going to see one last push higher before a much deeper drop. Or that we already topped and the deeper drop has already started.
The Fed tapering of $10 billion a month was looked at as good news by the markets and sparked a massive two-day rally. The low volume heading into the holidays, made it quite simple for the bulls to grind the tape higher—and here we are now.
The pullback was obviously just a small wave 4 down and now we are in the final stages of the wave 5 up. This is important, because once this wave ends, the much larger wave (4) down is on deck. The anticipated move lower could take the SPX some 250-350 lower before ending and still be a bullish wave count.
The biggest surprise that can unfold from here and catch almost everyone off guard would be that we are making some type of major top. For the most part, everyone is only expecting a 3%-5% pullback before new highs come. That may very well be the case and it does fit the longer term wave count I am watching, but there are plenty of reasons why one must be a bit careful about expecting higher highs in 2014.
After a major move like we saw in 2013, it would be going against history to expect a bear market to start in 2014. But we are not in normal times and anything could happen. Just be careful and expect the unexpected.
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Click here for Dean’s free report, outlining some concerns about 2014.
