Sentiment

Avi Gilburt

"THE BEST in This Business" --PSK (ElliottWaveTrader)

The Market Is About Probabilities – Not Certainties

As human beings, we like certainty in our lives.  And, that leads us to the need to feel in control of our lives and our surroundings. 

You see, if we believe we understand the reason for something, then it leads us to believe that we can control the future.  And, this need for control leads so many to seek out reasons for every stock market move we see. 

But I have news for you.  Certainty and control in life is only an illusion.  And, this truth is abundantly evident in the financial markets.

So, do we throw our hands up in the air and give up?  Does that mean we are unable to plan for our financial futures?  Absolutely not.  But, we do have to abandon expectations of certainty and move towards a more reasonable perspective of financial markets based upon probabilities.

For those of you that have followed my work in the past, you would know that I analyze markets based upon market sentiment and the herding principle, as they are portrayed through mathematically-based fractal patterns.  But, it also means that I inherently accept the lack of certainty inherent in analyzing the non-linear financial markets.  Rather, I view markets from a perspective of probabilities.

So, when I look at the stock market in its current structure, as well as the underlying major stocks within the market, it suggests that the greater probability points to a larger degree pullback in the coming weeks/months.

For this reason, I still think the greater probabilities suggest that the market will break down below 2700SPX in the coming weeks/months, with strong potential to drop as deep as the 2100-2200SPX region.  And, as long as the market remains below 3045SPX, then I can reasonably maintain that expectation. 

But, I understand that even though I am identifying what I see as the higher probability potential, there is still a 20-30% potential for the market to head higher to our longer term bull market targets north of 3800SPX without such a pullback. And, a break out through 3045, with follow through over 3115SPX, would suggest that we are going to rapidly move up towards at least the 3350SPX region in the heart of a 3rd wave rally, on our way to 3700+ for just that 3rd wave alone, with an ultimate target approaching 4000 for all 5 waves in the 2021/22 estimated time frame. 

So, again, I want to reiterate that I still believe the greater probabilities suggest that the market can see a sizeable decline begging in the near term.  However, should the market prove otherwise, and take the lesser probability path through 3045/3115, then we are likely in a market melt-up phase, and will be heading to 3700+ within the next 12-18 months – but, again, I see that as the lesser probability path at this time.

Avi Gilburt, co-founder of FATRADER, is the lead moderator of the forum and covers Market Sentiment. Founder of ElliottWaveTrader, with over 4000 members, Avi is renowned for being one of the most accurate and widely read analysts on the Web.
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