S&P500 Forecast: Is 4300 the Next Stop on the Market’s Upward Climb ?

Ten days ago, we posted that the expected correction for the S&P500 (SPX) had likely been completed.

This was based on our primary expectation, which has been in place for months, for the market to rally to the $4300-4500 region. Our analysis has relied on the Elliott Wave Principle (EWP) to inform our outlook for the market, which we will discuss further in this article.

S&P500 reached the ideal 3rd wave level yesterday: $4195 vs. 4199, … [and] should now be in a minor 4th wave to ideally $4100+/-10 before a 5th wave targets $4260+/-20. From there, we anticipate a multi-week correction before the index can rally to ideally $4395+/-25.”

Albeit it was a little lower than ideal, we were correct as the index bottomed on Friday, February 10 at $4060, which is only 0.7% below our target zone set forth ten days ago.

Today the index is already in rally mode. Hence, the green W-4 we anticipated has likely bottomed, and the green W-5 to ideally $4260+/-10, possibly as high as $4295+/-10, should be underway. See Figure 1 below.

The Primary Focus Is $4300.

From the EWP, we know that the third and fifth waves within an impulse typically reach the 161.80% and 200.00% Fibonacci extension of the length of the 1^st wave, measured from the 2^nd wave low, respectively.

In this case, we focus on the green W-5 and red W-iii. The green 200% extension is at $4258, whereas the red 161.80% extension is at $4295. Thus, as long as Friday, February 10, low at $4060 holds, we should expect W-5 of W-iii to target $4260-4295.

Bottom Line

Our primary expectation from September last year for a rally to SPX4400 continues to be on track. Moreover, as expected three weeks ago, the index topped and bottomed precisely where we anticipated it would go for the smaller (green) 1^st, 2^nd, 3^rd, and 4^th waves: $4440 vs. $4460+/-20, $3949 vs. $3940+/-20, $4195 vs. $4220+/-20, and $4060 vs. $4100+/-10, respectively.

One can have tremendous foresight from using the EWP. The mere fact the index topped and bottomed almost precisely where we thought it would many days in advance is proof of our point, translating to serious profits for those who subscribe to my premium Major Markets Forecasting service. Moreover, please focus on the forest, not the trees.

Follow the index’s price and well-documented EWP patterns, not the emotional hype du jour or some assumed narrative regarding what the market should or should not do.

Hence, unless the SPX breaks below Friday’s low at $4060, we see no reason not to expect $4260-4295. From there, we anticipate a multi-week correction before the index can rally to ideally $4395+/-25.