Executive Summary
- SP500 stalls near all-time highs
- A correction might push SP500 lower to $5300-$5630
- Anticipate additional new highs later in the calendar year or early in 2025
SP500 Trend is Incomplete to the Upside
The SP500 has trended sideways for the past two weeks. The rally from the August 5 low has developed into three waves thus far. That Elliott wave structure suggests the pattern is incomplete to the upside.
The main question is, will SP500 significantly decline prior to rallying to new highs?
Let’s look at two main Elliott wave models we are following.
Chart 1
The first wave count (chart 1) is that the recent all-time high is wave (i) of ((iii)). This implies a decline in wave (ii) of ((iii)) to correct the rally from September 6. The decline likely won’t be larger than the Sept 2-6 correction of nearly 5%. Therefore, we can anticipate the wave (ii) correction to fall between $5490-5630.
Chart 2
The second wave count (chart 2) is that the recent all-time high is wave ((b)) of 4. We shared this option in our August 9 forecast SP500 Elliott Wave – Temporary Correction.
This implies wave 4 to be a triangle pattern with more sideways chop to appear. Under this second wave count, a decline would take place from near current levels to around $5300 in wave ((c)) of the triangle.
Once wave 4 is complete in a few weeks, then wave 5 would rally up to new highs.
Bottom Line
If a correction develops, we anticipate it to be shallow, retracing to $5300-$5630 depending on the wave count.
Once the correction is complete, then new all-time highs are anticipated. The depth and structure of the correction will provide clues as to how high the next rally travels.
In the unexpected decline below $5300, we’ll re-evaluate for other patterns that might be developing.
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