Last week, I noted that as long as the S&P500 holds the 2320SPX level, it will begin a rally. On Monday, the market bottomed at 2322SPX, and began a 2% rally.

If one takes the time to become an open-minded market observer, one can learn a lot about the stock market, and how human beings react within the stock market.

We all know and love the phrase “buy low, and sell high.” While that is the ideal goal for investors, most investors are unable to attain their goals of buying the lows or selling the highs. Why is that? It is simply because we are emotional creatures, and we allow our emotions to drive our buying and selling decisions. For that reason, we are fearful to buy when all others around us are fearful as price drops, and we are exuberant and unable to sell when all others around us are euphoric at the highs. When you come to grips with this simple fact, and begin to understand the nature of the market, then you are on your way to becoming a much better investor.

So, back in February of 2016, when everyone was fearful of a stock market crash, we were turning quite bullish. And, we will not likely be turning bearish until the rest of the market turns bullish.

In fact, back in 2015 and going into 2016, I was warning my members at Elliottwavetrader.net that not only are we setting up for a rally which will take us to 2500+ on the SPX, but I was also expecting that the paradigms and correlations many follow would be breaking down.

And, since that time, as the evil emperor in Star Wars noted, “Everything is proceeding as I have foreseen.”

Moreover, it seems that Morgan Stanley has finally taken notice, stating this in early 2017:

“Regional correlations, cross-asset correlations and individual stock and FX correlations have fallen simultaneously. That’s unusual; we haven’t seen a shift this severe in over a decade . . .”

Before the election in November of 2016, I was again preparing the members in our trading room at Elliottwavetrader.net for the next phase of the strong rally I was expecting, which would take us into 2017. And, since that time, it seems the rally has not only taken most market participants by surprise, many still remain within their mindset of disbelief.