In our December update, we combined the Elliott Wave (EW) Principle with average midterm election-year seasonality and the Armstrong Pi-cycle turn dates and concluded for the S&P 500 (SPX) that
“… Provided the index holds above the November 21, 6720 low, the index can set itself up for a subdividing final 5th wave (gray waves W-i, ii, iii, iv, and v), ideally as high as 7490 by approximately April 18-28, 2026.”
Fast forward to today, and the SPX is up almost 2% since then, and appears to be subdividing as anticipated. So far, so good. With additional price data now available, we have updated our short- to intermediate-term EW count while maintaining the same ultimate upside target zone of around 7345-7490. See Figure 1 below.
Figure 1. Intermediate-term Elliott Wave count for the SPX
Contingent on price remaining above the warning levels*, with each successive break below increasing the odds by 20% that the uptrend has ended, we expect the index to ideally reach ~7100 for the blue W-iii, then drop to ~7015 for the blue W-iv, and rally to approximately 7160+/-40 for the orange W-3, etc. Here, the standard impulse pattern is shown; however, the green W-5 can also develop into an overlapping ending diagonal, resulting in an overlapping rally to the lower end of the target zone (~7345). For now, we have no indication that this will occur. But make no mistake: once this green W-5 is complete, ideally around April 18-28, we still expect a 2022-like bear market before the next larger multi-year rally to new ATHs can begin.
*Warning levels for the Bulls: 6917, 6878, 6844, 6824, and 6720. These will be adjusted upwards when the index continues to rise.
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