Multi-Day Bounce Expected for The S&P500

The S&P500 dropped to 4370 on April 18^th and rallied a daily later to SPX4471. Thus, so far, so good. See Figure 1 below.

Figure 1. SPX daily candlestick chart with detailed EWP count and several technical indicators

How the correction should unfold.

Corrective price action is always fraud with lots of twists and turns, but the two-week decline since the late-March high (red, intermediate wave-b) should require a multi-day correction, and so far, the current rally off the 4370 low has only lasted one day whereas the decline was two weeks.

Yes, B-waves consist of three smaller waves: a, b, and c. Albeit the index has already reached the lower end of the ideal (green) minor-b/2 wave’s target zone, see Figure 1 above, it has likely only completed wave-a of b/2. Hence, I expect a pullback to 4410-4430 for (grey) minute wave-b before wave-c of b/2 takes hold and rallies the index back to around 4500-4535 (upper grey target zone), depending on where the more miniature wave-b bottoms and how much wave-c extends (1.0x a or 1.618x a).

Bottom line

The S&P500 bottomed right where I thought it would, 4375 vs. 4370, and staged the anticipated rally. This rally should be part of a multi-day bounce, and a short-term pullback to ideally 4410-4430 should now be underway before the Bulls can rally the price to 4500-4535, which fits well with my initial idea last week of a high at around SPX4500+/-25.

I still expect a decline to ideally SPX4150+/-25 (green c/3) etc. (red arrows). It will require a breakout above SPX4435 to suggest something else is unfolding (green arrow). Thus, as I always say, “All we can do is anticipate, monitor, and adjust.”