Is the S&P500 ready for 5500+?
Allow me to explain to those who are new to my work, and as a repeat for my regulars, I primarily use the Elliott Wave Principle (EWP) and technical analysis (TA) for my premium major market members to assess how high and low the index can go for certain directional moves, called waves. These tools are so accurate when applied correctly that I already determined on February 6, see here,
“the SPX can still try for a last stab lower to SPX4150+/-50 to complete a more significant 4th wave, but it will have to drop below SPX4300 to confirm this option, with a severe warning below SPX4400.”
Ten days later, on February 16, see here, I then found
“The SPX is in lockstep with the 2011 correction. Not until the index breaks above SPX4595 must we assume that the fractal is playing out between then and now. Back then, it took another three weeks before a long-lasting bottom was struck. The fractal suggests we can still see SPX4150+/50 within a few weeks.”
Thus, with yesterday’s low at SPX4115, the track record has been established the preferred EWP count is still on track to forecast the next larger directional move reliably.
Figure 1. S&P500 daily candlestick charts with detailed EWP count
One last stab lower cannot be excluded just yet, but it is not necessary.
Although the final few days broke away from the fractal that developed with 2011, the SPX has now reached well inside the ideal target zone of 4150+/-50 as forecasted three weeks ago. At the end, that is what matters, as the devil is often in the details due to daily variations that produce a few more twists and turns. In other words, focus on the bigger picture outcome. That is what the EWP tracks anyway; mass psychology, which expresses itself better on longer time frames.
That said, the index can still try to do one last (grey) minute-v of (green) minor-5 of (red) intermediate wave-c of (black) major-4, but it is not necessary anymore as there are now enough scribbles in place since the February bounce high to suggest the downside is complete. Thus, a break back above SPX4590, with a first warning for the Bears above SPX4365 and then SPX4490, will tell me the run to SPX5000+ for (black) major wave-5 is underway. I expect this wave to subdivide into five smaller waves, and thus the advance will not be straightforward.
Further evidence of a crucial low being in place or near is that commercial traders are long the S&P500 futures at a 5-year record. The NASDAQ100 (NDX) looks about complete to the downside. And lastly, markets often bottom at the onset of war.
Bottom line: The 2011 fractal I suggested last week and the EWP count I showed three weeks ago pointed to SPX4150+/50. With yesterday’s low at SPX4115, the index achieved its goal and has done enough to put in a longer-lasting bottom. A break back above SPX4590 will tell me the run to SPX5000+ is underway. As always, I will keep my premium major market members updated in detail on how the rally is unfolding as the Bulls do want to hold several key lower levels that must be monitored.