This past week, I have seen some very interesting articles about the effect of years ending in the number five. I have seen articles about how Treasurys are signaling that the market is about to crash. I have seen articles about how the drop in oil will negatively affect stocks. In fact, I have seen many "reasons" for people to get bearish. There is only one problem with this: The market is not moved by "reason," but, rather, by emotion. Furthermore, much analysis is based upon what has happened in the past, which some try to correlate to what will happen today. However, seeming "correlations" come and go. And when they go, they frustrate those who are still looking for the same correlations to apply. But markets are dynamic, non-linear beasts. So, unless one utilizes an objective methodology which is able to identify breakdowns in supposed "correlations," then looking for continued correlations will only leave you behind as the market moves to the beat of its own drum. Does that mean that there is a methodology out there that is foolproof? Absolutely not. There is no Holy Grail to the markets. Rather, there are only probabilities. As I said last week, those seeking absolutes will be forever disappointed and disgruntled with market analysis, as well as in life. But, you still have to know early enough when you have misapplied your methodology so that you can quickly realign your compass. Along those lines, I also noted last week that the rally in 2012 looked very corrective to me, which made me question the long-term health of the market, and I thought the market would top at the end of 2013. But in 2014, the market proved to be much more bullish than I had expected. So, while I missed about 100 points of the rally due to my cautiousness, since May, our Fibonacci Pinball method provided us with over 400 points of movement within a 200-point region once I realigned my compass. Based upon this same methodology, at this point in time, there is nothing suggesting to me that the market will not see much higher levels in 2015. Yet, a bigger pullback is still not out of the question. I am still quite troubled by how aggressive the current stance seems to be in the S&P 500. It is almost too good to be true. In the most bullish posture I am seeing, based upon the last week's market action, there is a setup to take us to 2220 by the end of January. So, yes, it just seems a little hard to believe at the moment. But one thing I have learned in my years in the market is that if the market provides confirmation of a pattern that just looks too good to be true, don't fight it. I am currently looking for confirmation, so allow me to explain the objective signs I seek. The aggressive bullish pattern we have been tracking has the bottom of wave ii of 3 in place this past week, with us currently in wave (2) of iii of 3. If we complete wave (2) early next week, followed by a strong move over the top of wave (1), that is an initial signal that the aggressive bullish pattern is about to trigger to 2225, and potentially by the end of January. You can also place stops on your long positions just under the top of wave (1) should that break out occur. However, even though I have labeled wave (1) as being in place in the most bullish count, I have questions about the micro count for a full 5 waves up. But since it struck the .618 extension within that wave degree perfectly, I am going to give it the benefit of the doubt, and consider wave (1) in the bullish count as completed. That brings me to our second test, which I have mentioned many times before over the last month — a sustained breakout over the 2125 level on the S&P 500 Emini futures ESH5, +0.36% The 2110-2125 region has significant resistance which must be overcome by a strong break out in order to signal we have begun the run to 2225, and, ultimately, 2400-2500. Should we fail that test, it opens the door to a potential larger-degree wave 2 to be in play, or even that this rally into 2015 may turn out to be an ending diagonal, which will present us with a very high degree of volatility and whipsaw, but should still exceed the 2200 region before it completes. My alternative count adopts Xenia Taoubina's (the lead analysts in our options service at Elliottwavetrader.net) perspective. It provides that the all-time high in the S&P 500 last month was really the top of wave 1, and the initial decline was the a-wave of wave 2. This count would alleviate many of the problems I have with what I feel is too aggressive a stance by the market, and potentially takes us below the December low for a larger degree wave 2. It is represented on our 60-minute chart linked below in yellow. Within this alternative, we are likely within a b-wave of wave 2. As long as the market remains over the 2010-2014ES region, we need to be looking higher for a (c) wave within this b-wave. However, should we take out 2010ES strongly, it makes it much more likely that the b-wave topped on Friday, and we are heading down to test the December low, and potentially break it within the c-wave of the bigger wave 2. Again, this is the pattern I really like most, but cannot make it my primary pattern due to the aggressive bullish potential on the table. Ideally, this pattern takes us down into the end of the month for the bottom of a wave 2. So, if the upcoming week does not provide us with a strong breakout signal, the larger-degree wave 2 pattern becomes much more likely. Avi Gilburt