Using the wave of Elliott (EW), we successfully followed the most likely path for SP500 (SPX) within a few months. We discovered that in November last year
“The end of Diagonals (EDS) is difficult because all their waves include three waves: 3-3-3-3-3. In addition, W-III usually aims at 123.60% of the WIR extension, measured from W-II. W-IV tends to correct to expand 61.80%, after which the last WV is focused on extension of 161.80%. In this case, we look at W-III to achieve at least SPX6060, W-IV should at the bottom SPX5725, and WV can reach at least SPX6260. “
(Gray) W-III was crowned on December 6 for USD 6099, and (Gray) W-IV could bring out on January 13 on SPX5773, while (Gray) WV reached only USD 6147 on February 19. See Figure 1 below. The previous two waves have reached perfect target zones based on Fibonacci (gray squares) for ED, while the latter were not target (gray arrows). Although the price is the ultimate arbiter and the markets are not guilty of us, i.e.They do not have to achieve perfect target zones, such a great mission is sporadic and disturbing this potential number of waves. More about this later.
Figure 1. Number of Elliott wave for SP500 from August 2024
Namely, in our previous update we showed that the index had the last chance to achieve an extension of 161.80% Fibonacci in the amount of USD 6,260, making it dependent on the low level of that day (USD 5,732), and especially the level of USD 5,650. If it wasn’t, it may drop to USD 5,250. Fast forward, and so far SPX has been 5504 USD yesterday.
If we enlarge, the indicator reached the highest level of 100% FIB Rally 2020-21, USD 6121 compared to USD 6147 measured from low level 2022. See Figure 2 below.
Figure 2. Number of Elliott waves for SP500 since March 2020, Aka The Covid Low
In the standard impulse pattern based on Fibonacci, the third third wave, in this case (red) W-III (black) W-3, tends to aim in 100-123.6% of the W-1 extension, measured from W-2. The fourth wave often returns to the FIB extension 61.8-76.4%, followed by the fifth wave focused on the extension of 138.2-161.8% to complete a more significant third wave. In this case, the target zones are $ 6121–6738, $ 5498–5117 and USD 7122-7746, respectively. Until now, the SP500 has reached USD 6147 and USD 5504, close to the extension 100% and 76.4%, by only a few tenth percentage points.
Although in this case (red) W-IV W-3 should ideally manage 61.80% FIB extension, because W-III reached 100% extension, this is not necessary, because 4th The waves often return 23.6-38.2% of the previous 3Rd Wave, which means that 76.4% to USD 5,498 is enough. Besides, we can now accept “Great Miss“Index, not hitting USD 6,260 and instead reach the peak of 6147 USD. It would be more sensible that it was an irregular peak of wave B extended wave correction IV. See Figure 3 below. In such a correction, WB is greater than WA, and Wal C is even longer.
Figure 3
In this case, the red W-III reached the peak of USD 6,128, on January 24, even closer to the perfect goal 6,121 USD than the best USD 6147 (7p vs 26p). Therefore, based on well -known momentary patterns, we find that the index recently crowned at the lower end of the typical 3Rd 3Rd Wave target zone. Yesterday also to the bottom to the right at the upper end of the typical 4th 3Rd Wave target zone. Both were within 0.1% of ideal levels based on fibonacci.
Continuation of maintenance above yesterday’s low, the index can accumulate to perfectly 7122-7746 USD to complete a more extensive third wave, Black W-3, in Figure 3. If the index stops at around 5,900 $ +/- 100, and then falls below the low week, the path shown in Figure 1 and 2 is operated. In this case, we expect SPX to be focused on an extension of 61.8% to USD 5,116 before the start of Red WV to 7122-7746 USD.
Considering the way the mood is currently on Wall Street, and Aaii Bearish’s moods exceed 57% for three consecutive weeks for the first time in the history of the survey and the CNN Fear & Greed index consistently with extreme fear from February 25, while seasonality appears, rally with breakdown, and even “Only reflection 300-500p“It seems to be the most likely scenario at this stage.
