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MarketWatch: Stock Market Moves in 2016 Could Hinge on Next 3 Weeks

MarketWatch: Stock Market Moves in 2016 Could Hinge on Next 3 Weeks
(Illustration: Dollar Photo Club/Rob Williams)

By    |   Tuesday, 10 November 2015 06:00 AM

The stock market’s moves in the next few weeks will have a big effect on its direction in 2016, says Avi Gilburt, the author of ElliottWaveTrader.net.

The S&P 500 stock index fell below key levels of 2,080 and 2,075 as of Monday, opening up the possibility it may decline further to 2,000 to 2,020, he writes on MarketWatch.com. The stock benchmark declined 1.3 percent to about 2,072 as of 1:40 p.m. Monday.

“After the market broke out over the 2047 level on the SPX several weeks ago, and broke the immediate downside setup, it has struck each of our upside resistance targets just about to the penny for the last several weeks, fell back, but held support each time in order to continue to the next higher target we have noted on our charts,” Gilburt writes. “Whether this will continue to 2,328 is still an open question until we see the breakout over 2,142.”

Elliott Wave Theory was developed by Ralph Nelson Elliott in the 1920s to explain how stock markets move in cycles or “waves.” His methods were popularized in the 1970s after the publication of the book “Elliott Wave Principle” by A.J. Frost and Robert R. Prechter.

“While I am still questioning if we are heading directly to 2328, potentially by as early as the end of 2015 (but more likely into the first quarter of 2016), the SPX will still have two tests ahead of it to prove that to be the applicable target and timing,” Gilburt says. “The bulls would actually be better served by seeing a bigger drop back down into the end of November.”

A decline this month would set up the market for a minimum target of 2,459 by next summer, or 19 percent higher than current levels.

Investors are looking ahead to December, when the Federal Reserve is expected to raise interest rates in December for the first time since 2006 after last month’s payrolls report showed better than expected hiring.

The Federal Open Market Committee will announce its decision on rates at its next meeting in December. It has held its target rate near zero percent since 2008, as the economy fell into the steepest decline since the Great Depression.

“The October report removes any excuse for the Fed to keep rates at zero,” said Douglas Holtz-Eakin, economist, American Action Forum. “The more interesting issue is whether the strong October report represents a one-time blip in the aftermath of the weak August and September performance, or is an early sign of growth that will remain above the 2.2 percent average since the recovery began.”

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The stock market's moves in the next few weeks will have a big effect on its direction in 2016, says Avi Gilburt, the author of ElliottWaveTrader.net.
stocks, market, Elliott Wave, Avi Gilburt
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2015-00-10
Tuesday, 10 November 2015 06:00 AM
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