Using the Elliott Wave Principle (EWP), we have been successfully tracking the most likely path forward for the S&P 500 (SPX) over several months. Although there are many ways to navigate the markets and to each their own, we find the EWP to be the most reliable and accurate. Namely, already in November last year, we found:
“Wave-iii to reach at least SPX6060, Wave-iv should bottom around SPX5725, and Wave-v can reach at least SPX6260.”
You can read our subsequent updates since, but we know the index peaked on December 6 at $6099 and bottomed out on January 13 at SPX5773.
Thus, with an accuracy of around ±2%, we reliably anticipated using the EWP where the index should top and bottom three months ahead and have kept track since. Of course, we could not know the exact path the market would take, as the daily price action is the least reliable. Still, being able to foresee the larger top and bottom zones well ahead of time and before most others do is invaluable.
We, therefore, continue to assign the index's advance since the August 2024 low an Ending Diagonal (ED) structure. As a reminder, an ED’s waves (i-ii-iii-iv-v) comprise three waves: 3-3-3-3-3 = abc-abc-abc-abc-abc. The 3rd, 4th, and 5th waves, in this case, the red W-iii, iv, and v, typically target the 123.6-138.2%, 61.8-76.4%, and 161.8-176.4% Fibonacci extensions of W-i, measured from W-ii. So far, the index has done precisely that. See Figure 1 above. But, as always, we will monitor the advance to narrow down the red W-v target zone.
In our previous update, see here, we concluded
“However we slice and dice it; over the intermediate term, the index is most likely not yet done to the upside, and even after a possible last leg lower better into the ideal $5735-5810 target zone, we can still expect a rally to new all-time highs. But please note that once the $6200+ region has been reached, a much larger correction, if not an outright multi-year Bear market, can start.”
With the SPX5773 low on January 13 and the relentless 320p rally since, our long-standing and short-term targets have all been met, and we can confidently state that the red W-iv has also been completed. Thus, the red W-v is underway and will subdivide into the green 1-5 sequence or the a-b-c path.
We can’t know for sure just yet. However, we should keep our eyes on the price and not get bogged down by daily variations: SPX6400-6500, contingent on holding at least above the 3rd warning level at SPX5930.