NEW YORK (TheStreet) -- The stock market needed to make a big gap up Monday to maintain the bullish Elliott Wave count required to take the S&P 500 to the 2150-2175 area next. The market did exactly what it need to do.
Even using a more bullish Elliott Wave perspective, the S&P 500 still presents a pattern that should provide somewhat limited upside, but the iShares Russell 2000 ETF (IWM) - Get Free Report is still maintaining a very strong bullish wave pattern. As long as the next pullback does not break down below the $127 level in the IWM, the pattern taking it over $140 is still holding strong.
In the S&P 500 a run is seen to the 2131-2135 region for the next local topping target, which should then provide a corrective pullback.
In order to maintain a bullish view of the S&P 500, there can't be a breakdown below 2109. But it will still require a break of 2103 to invalidate the bullish Elliott Wave count seen on the chart. That count should take the S&P 500 to 2150-2175.
Remember, a breakdown below 2103 paves the way for a larger correction, which could take the S&P 500 back down toward the 1800 area. As long as support is held, however, the next target region should still be higher.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.