S&P 500 Elliott Wave Update: The rally to 7120 Continues

In a textbook five-wave impulse pattern, the third wave usually reaches the 161.8% extension, the fourth wave hits the 100.0%, and the fifth wave extends to 200.0%. This would translate to roughly 6852 for the orange W-3, 6800 for the W-4, and 6897 for the W-5. In reality, the index peaked at 6850, dipped to 6780, and today reached 6895. Thus, the EW predicted these moves with remarkable accuracy (+/- 0.03-0.3%).

What Does This Mean Moving Forward?

Unless there are unexpected extensions of the current (orange) W-5, we anticipate a slight pullback in the gray 4th wave to around 6785-6825 before the next upward move (gray W-v) begins. The latter could then ideally reach 6930-7010. Note that, like the orange W-4, pullbacks in an uptrend tend to be shallow because “in bull markets the upside surprises and the downside disappoints.” If that is the case, the fifth wave will go higher as well. Regardless, this ideal upside target zone is already closer to the 7120 level we’ve been watching, from where the chances of a prolonged move down to 5800+/-400 increase significantly.

The short-term warning levels for the Bulls are set at 6827, 6800, 6738, 6660, and 6597. Each time these levels are broken, the chances of a continued uptrend drop by 20%.