SP500 Elliott Wave: Continued Rally

Executive Summary

• Trend Bias: Shifting higher after a month-long downward correction.
• Wave Count: Wave ((iii)) bullish rally.
• If SPX pushes below 7,237, then a deeper decline is likely to 7,103 or 6,929.

After correcting sideways for the month of June, SPX appears poised to continue its rally to new all-time highs.

Current Elliott Wave Analysis

An Elliott wave impulse pattern counts as 5 waves. It appears the rally from March 30 has completed five waves while registering RSI divergence into the high.

SPX did correct lower. However, the decline was sloppy and choppy, indicative of a corrective decline and not an impulsive decline. This behavior suggests the decline would be temporary and lead to new all-time highs.

It is possible to consider that the month-long zigzag decline in June is complete, labeled (a)-(b)-(c). Prices may decline further, possibly reaching the 38% Fibonacci retracement level near 7,103.

However, SPX doesn’t have to decline further as it has reached the 23.6% retracement level, which is considered the minimum retracement zone.

Keep an eye on the brown resistance trend line. If SPX breaks above this trend line, then it would be a clue that perhaps wave ((iii)) is trending higher to new all-time highs.

Failure to break above the resistance trend line, currently sitting near 7,525 may signal that a deeper correction in wave ((ii)) is not complete.

Regardless on the depth of the decline, we anticipate that SPX will hold above the 200-day simple moving average at 6,929.

Bottom Line

SPX is in the latter stages of a corrective decline for wave ((ii)). This means a strong wave ((iii)) bullish rally is about to begin to push SPX up to new all-time highs.

If the June low of 7,237 is broken, then wave ((ii)) is still carving and pushing lower, possibly to 7,103 and 6,929.