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The best way to describe Monday's action is as a consolidation day. As we noted over the weekend, as long as the S&P 500 can maintain over the 2035-40 support region, it will set up to go higher towards 2060 next, followed by 2080. This should complete wave iii off the February lows.

With the manner in which the market is rallying so far, we have seen the market grind higher, consolidate, continue to grind higher, consolidate more, and then continue to grind higher yet. Moreover, the grind higher is accompanied by relatively strong market breadth, which is something we have not seen in quite some time. This is normally very bullish action.

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But, as I have warned, until the market completes a full impulsive pattern up towards the prior all-time highs, without breaking below the 1995-2005SPX support region, I am going to remain cautiously optimistic about the return of the bull market. And, as we noted over the weekend, we will likely see that support region tested just around the corner.

Should it pass the test, then it becomes very likely the bull market is back, and will carry us into next year as we rally to 2500. Should it fail the test, then we will likely be mired in this correction for months to come, and revisit the 1700's.

See charts illustrating the wave counts on the S&P 500.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.