S&P 500’s Rally to $4300+ Is Underway

Expected Three Waves Back Down Complete

Using the Elliott Wave Principle (EWP), already in September last year, our primary expectation for the S&P500 (SPX) was to bottom at around $3200-3300 for a large (blue) Wave-A and then rally to $4300+ in a three waves fashions: a-b-c. See here and here.

So far, so good, as the index bottomed on October 13 at $3491 for Wave-A (blue W-A). It rallied to $4100 by December 1 for (black) W-a of (blue) W-B. It then dipped to $3764 on December 22 for W-b of B and staged another 220p rally, which we anticipated in our subsequent last few updates of 2022. From the EWP, we know that c waves comprise five waves: red W-i, ii, iii, iv, and v. See figure 1 below.

The Primary Focus of $3850 Was Correct. Continue to Expect $4375-4500

In our last update, we therefore anticipated “the red W-ii soon, ideally down to $3850+/-25, before the red W-iii to ideally $4275+/-50 kicks in.” Last week the index reached $3885 and rocketed back to the $4030s today. Thus, so far, all our expected market moves have come to fruition, and we, therefore, continue to “see no reason for this [Bullish] pattern not to unfold.” Since markets are fractal, red W-iii will comprise five green waves, with W-1 about to complete at $4060+/-20. This week, a quick W-2 pullback to around $3940+/-20 is expected, followed by green W-3 to ideally $4220+/-20, etc.

Bottom Line

Our primary expectation from September last year continues to be on track. Moreover, as expected in December 2022, the S&P500 rallied strongly. It then also dipped as forecasted in our update from ten days ago. Thus, based on the price action and knowledge of the EWP, we considered the expected multi-day correction to $3850+/-25 a low-risk buying opportunity.

It came and went with a low at $3885. The last low-risk chance will be a pullback to around $3940+/-20 from a top at around $4060+/-20. And unless the index breaks back below last week’s low, with a first warning below $3920, we continue to see no reason for this Bull run not to unfold.