S&P500 Update: The Bears Are In Charge, Is 3300 Next?

Five Waves Lower After Three Waves Up

Since the mid-August high, the S&P500 has done five Elliott Wave Principle (EWP) waves lower. See Figure 1 below. This pattern tells me the current dominant path of the market is again lower. Moreover, the June-August rally was only three waves: a corrective, counter-trend rally. Thus, a break below SPX3886 (last week’s low and today’s low) tells me an impulse path is most likely developing, as shown.

Figure 1. S&P500 daily chart with detailed EWP count and several technical indicators

A Break Below SPX3886 Opens The Door For a Waterfall Decline

A break below the early September low of SPX3886 opens the door for the impulse pattern as shown with an ideal target zone of SPX3515-3400 for (red) W-iii/c, then a potential W-iv rally back to ideally SPX3675-3785 followed by the last drop to ideally SPX3230-3330 to complete W-v of W-c of W-A.

There’s a slight nuance to this overall bigger picture W-A, but the anticipated path and downside targets are the same. Hence, I will share it once we get there. Conversely, the index will have to break back above this week’s high of 4119 to tell us this bearish path is not unfolding and that 4500 is next. But, for now, I prefer to look lower.