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S&P500 Still On Track For 4375

Then I expect a wave-4 down to around current levels (SPX4110+/-10) before a last 5th wave (green minor-5) rallies price to SPX4375. This [Elliott Wave Principle] EWP path forward is based on the assumption the index will follow a textbook EWP impulse pattern higher. There is nothing to tell me it will not, but it can, of course, always deviate. To be determined. But for now, this is all I can go by.

Now at the end of April, the index topped last week at SPX4191, went sideways for the remainder of the week, i.e., dropped in three waves (grey a, b, c highlighted in the grey insert in Figure 1 below) down to SPX4120+/-5p and is now making new all-time highs. Thus, so far, the SPX fell 19p (0.45%) short of the lower end of the ideal (green) minor wave-3 target but nailed the forecasted minor wave-4 target zone (4118, 4124 vs. SPX4110+/-10). All are well within the margins of error and show the accuracy of Fibonacci-based EWP forecasting.

Figure 1. S&P500 hourly chart, the focus in this update is on the green and grey inserts

The S&P500 can still reach SPX4375 assuming Fibonacci-based wave extensions continue to work.

The question now is if SPX4191 was all off (green) minor 3, SPX4124 all of minor-4 (in the form of a running flat: see here for examples of what are called “flat corrections” in EWP terms), and now minor wave-5 to ideally SPX4375 is underway, potentially subdividing in the grey “i? ii?, iii?, iv?, v?” waves. Since minor-1 and minor-3 are subdivided into five smaller (grey) minute waves, it is logical to assume minor-5 will do the same. Besides, ordinarily, 5th waves are equal length to the 1st wave, and since in this EWP count, wave-4 bottomed at the 100% extension, wave-5 should then target the 200% extension (100% of wave-1 + 100% of wave-1) at SPX4375. So far, so good.

The -even more Bullish alternative- is that last week’s high was only (grey) minute wave-iii of green minor-3 because the SPX “only” reached the 123.60% extension followed by “only” a 23.60% retrace (123.6100.0%). This option is labeled as “alt: iii, alt: iv.” Albeit wave-3 is now longer than wave-1 and has accomplished its minimum requirement (see here), it is slightly less than usual. Thus one needs to be aware of an alternative, which I am presenting here. It means minor-3 is still unfolding and can still try to reach SPX4214-4275 before minor-4 kicks in.

In Bull markets, I always prefer to have an alternate, more Bullish EWP option because they often present upside surprises and downside disappoints. The alternate option surely fits that bill. Besides, IMHO, this is simply a bit of a luxury problem, i.e., a matter of “how high can we go?”.

If the index can hold last week’s low and especially SPX4095, then I see no reason to become bearish, and I will let the market dictate me if the preferred or alternate, even more, Bullish path is unfolding. Ultimately both point to SPX4375, and as I continue to tell my Premium Major Markets Trading Members: “do not short, instead view pullbacks as buying opportunities as we keep our eyes on the SPX4375 price”.