With the S&P 500’s break past 2,915 points, the door is open to 3,000.
So let’s discuss what it will take to keep pressure toward 3,000, which would be another new record, and what that would mean for our Elliott Wave charts.
In the simplest terms, the S&P 500 SPX, +0.11% now has the opportunity to provide us with something we have not seen in quite some time: a clear five-wave structure. That structure has been tracked off the March lows. That would place us in wave v of 3, as highlighted on the attached five-minute chart. This means that the market “should” continue higher toward 2,965 this week.
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Once wave v of 3 completes, I would expect to see a wave 4 pullback, as also identified on the five-minute chart. The ideal support for that pullback is in the 2,892-2,915 level if wave 3 is only able to reach 2,965. From a theoretical perspective, 2,892-2,897 represents the 0.382 retracement of wave 3, and is also the region of the 4th wave of one lesser degree. Those are quite common targets for a 4th-wave pullback.
However, should the market fail to extend higher in the coming week, and then break down below 2,884, it would suggest that either the b-wave has topped, or the [c] wave of this b-wave is morphing into an ending diagonal. And, without a completed five-wave structure off the March low, it would take a sustained follow through below 2,850 to suggest the b-wave has indeed topped.
Bigger picture
In the bigger picture, I still view this rally as part of a corrective structure. While I have addressed numerous times why a rally to as high as 3,011-3,040 can still be part of a larger corrective structure, I even warned of that potential before we began this rally off the December lows. In fact, last weekend, I wrote a three-page analysis detailing the reasoning as to why I believe we are still in a larger-degree corrective structure. For those who did not read it, please feel free to see my market update on Sunday night, April 21.
If the market continues on its current path, it will likely take several more weeks before this b-wave tops out — assuming we continue to hold support throughout that time frame. And, for now, my expectation remains that we see a larger-degree c-wave decline take us back down toward the December lows, and potentially even a bit lower.
But as I have also reiterated even as we were approaching the December lows, I still think this bull market, which began in 2009, can rally up toward 3,500-4,000 by 2022-2023. So I am going to view the next larger-degree drop in the market as a major buying opportunity for the next multi-year rally.
View additional charts illustrating Avi’s wave counts on the S&P 500 across various time frames.
Avi Gilburt is a widely followed Elliott Wave technical analyst and founder of ElliottWaveTrader.net, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.