Avi Gilburt: Major Whipsaws Ahead
Many of the guests we have on FS Insider make timely calls in various markets, and Avi Gilburt of ElliottWaveTrader.net is no exception. The last time Gilburt came on our show in November 2016, rather than predicting a correction, he suggested that the S&P 500 and other major market indices may just continue in a straight up move well beyond what people expect – what he referred to as a "melt up" – which is exactly what happened.
This time, Avi is much more cautious in the near-term, noting that he was selling into the last major rally and not looking to get back into the market until some important things happen, which he covered in our recent interview. Here's some of what he had to say...
“Last week, when we got the big move up after Trump’s speech, I noted that I was selling into that,” he said. “It was close enough to the target that anything that had shorter-term durations on options, people should start considering getting out of.”
He’s looking to reload in about a month or so, he added.
“The ideal target for this pullback is 2,285 (on the S&P 500),” he said. “I’m not sure if we’re going to attain it, but that really is the ideal target.”
After that, his next target is going to be between 2,487 to as high as 2,547, which he expects we’ll hit sometime mid-year.
Fibonacci Pinball Analysis and Elliott Wave Theory
Gilburt relies on a combination of Elliott Wave Theory and Fibonacci Pinball Analysis, he stated. In his view, news and fundamentals don’t drive the market.
“We believe the market is driven by emotion,” he said. “Elliott basically postulated that public sentiment, public emotion, mass psychology — whatever you want to call it — moves in five waves within a primary trend, and three waves in a counter trend.”
Once a full five-wave move in public sentiment is completed, the subconscious sentiment of the public shifts in the opposite direction, said Avi. The turning points, he argued, take place around Fibonacci levels.
“(This) is why we’ve now taken our Fibonacci Pinball and applied it over the Elliott Wave structure to make our analysis that much tighter,” he said.
He’s going to exit the market once this current structure possibly completes at the end of 2017 to early 2018, he stated. From there, he expects at least a 15 to 20 percent correction, down to 2,100 or so on the S&P 500.
Avi also provided his analysis on the gold market, which has been struggling in recent weeks, and the US dollar.
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