That said, I believe we have made an interim top or are very close to a top at 2092, which is an interesting level as there is price resistance, a descending black drawn from the two highest highs (May and Dec) and a modest Fib extension (23.6%) of the cycle beginning at 2021 and ending at 2078.
Beginning Thursday night and continuing through Friday, the market undertook a small 5 wave correction leaving us with a pretty decent which is likely to determine the next short term high before we see a correction of any consequence.
Taking 2092 as the top of the current cycle and 2034 as the bottom, a 38% retracement would allow us to visit 2070 while a 50% take us down to 2064 where would likely find buyers who would likely take us back up into the zone of recent highs. I do not foresee complete capitulation and a sudden collapse in prices.
And while I’m long term, it will take a recession to really sink the market but until then I think the bulls hold the upper hand in what will likely prove to be a drawn out process unless there is a macro economic “shock” that undermines confidence.
But as measured by $SKEW (a measure of tail risk), investors are complacent and metaphorically have taken off their parachutes. If the bulls are unable to put in higher highs, this state is unlikely to last opening the door to greater but within a contained trading range. We have seen many times in the recent past.
Why we had a good week: http://quantifiableedges.com/blog/ and the case being made by the bulls: http://www.seeitmarket.com/sp-500-headed-new-all-time-highs-heres-why-stock-market-15558/
George Soros recently articulated the biggest case, a complete breakdown in the correlation between the Nikkei and the $SPX priced in yen. To restore the correlation, the Nikkei must go up or the $SPX must retreat. With a strong yen the former is unlikely.
And while I always hold opinions about what might happen, I only trade price and the direction of price with tight stops.