Heed the fact that Long-term S&P Target has been met

Thu Nov27 (NY) - by Anatoly Veltman - Chief Global Analyst - Ever since SP turned down from 1576 double-top in Oct 2007 - it was quite clear to those familiar with Elliott Wave Principle: the ideal target of the Bear lag lodged near the double-bottom level of 768. I first explained that over a year ago - and my strategic bias was Short equities since then. From discussion around the 1450 oscillation: Record double-top (2000 and 2007) is becoming clearer to more analysts. In Elliott Wave (EW) terms: flat correction, i.e. from record 1576 to 769-800 area (50% price erosion!) is not out of the question! Sounds far-fetched? It did as much 2000-2002! Former catalyst: bursting of dot.com bubble, followed by manifestation of fundamentalism and corporate fraud. Now: how about bursting of real-estate bubble, credit write-downs, excessive Wall Street compensation; followed by stagflation scare, disinvestment from paper assets, looming corporate and federal budget "legacy" crisis (baby-boomers hit retirement) -- all of which will puncture the BRIC (Brazil, Russia, India, China) bubble! Still skeptical? Have you noticed: the number of stocks on its 52-week lows just matched record 2002 levels! The only reason to look back is if it may help us looking forward. So, consistent with the previous idea: I now hypothesize that Long Term Equity Bull Market, the basis for the century drift bias, is ready to resume! Monitoring SP closely real-time over the past two months, I've noticed shorter-term waves' tendency to later bounce differently compared to early October pattern (when I pursued powerful wave 3 impulse, shorting every 38.2% bounce). Four straight times going into Oct9 crash, the bounces were exactly 38.2%! But from Oct10 (obviously extended) low: bounces were easily exceeding 38.2% and aiming as high as 61.8% targets! Wave 4 consolidation appeared finally mature on Election day - and wave 5 decline predictably resumed. Downside impulsive power has predictably lacked - and only 50% bounces were to be shorted (so late in the game). I'm now assuming that final low is 739; thus next best trade is NOT to look to Short bounces. Best trade is now to try going Long on (a deep, ideally 61.8%) wave 2 correction - of which there only should be one! Later, once 1000 resistance is overcome and everyone realizes the newborn Bullish impulse, wave 3 will powerfully gap ahead! . . . (to read the remainder of this article, please log in below.)