S&P 500 Elliott Wave: Targeting August 2024 Low

Current Elliott Wave Analysis

The Elliott wave pattern of the decline suggests the downtrend is not over and the SP500 may see prices return to the August 2024 low near 5,100.

The pattern we are following is that an ending diagonal wave 5 topped at the February 19 high of 6,147. Ending diagonal’s are just as the name implies, an ending wave of a larger Elliott wave sequence. Ending diagonal patterns tend to be swiftly retraced. Therefore, a higher likelihood scenario is that the SP500 price retraces back to the wave 5 origin at 5,119.

Adding to this case, it appears the February 19 high could also be the terminal price for the impulse pattern which began October 2022. With an impulse pattern that lasted two-plus years, the subsequent corrective wave could last the rest of calendar year 2025 and possibly longer driving SP500 to even lower levels below 5,119.

For now, we’ll have to count through the waves and see how the structure develops.

A couple of clues we can pick up regarding the recent price action is that the February to March decline appears impulsive. The rally in March was shallow and appears corrective.

This implies the market needs at least one more decline of similar size or Fibonacci proportions to the February decline. The equal wave of the next down leg arrives near 5,180, just above the origin of the ending diagonal pattern.

Therefore, this next decline has a good chance of peeling back another 7% driving the price of SP500 down into the 5,100 handle.

Bottom Line

SP500 appears to be in wave ((iii)) or wave ((c)) of a decline. This decline has a higher likelihood of reaching 5,100 in the coming weeks.

If this decline is correcting the rally that began in October 2022, then a corrective down wave is likely to last most of 2025 and reach further below 5,100.

There are Elliott wave patterns that call for a short-term rally that may retest 5,800, but the longer-term pattern is bearish to 5,100.

Short-Term Bias: Mixed to bearish

Long-Term Bias: Bearish

Key Level for Bearish Bias: 5,800

Initial Target: 5,100