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Can S&P 500 Reach 5000+ Amid Bear Market? 

By Dr. Arnout ter Schure Stock MarketsJun 17, 2022 01:44PM ET
www.investing.com/analysis/can-sp-500-reach-5000-after-bear-market-200625953
Can S&P 500 Reach 5000+ Amid Bear Market? 
By Dr. Arnout ter Schure   |  Jun 17, 2022 01:44PM ET
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You must think I am crazy even asking this question because prices are supposedly only going down in a bear market. But allow me to explain:

In my article about the Dow Jones Industrial Average posted yesterday, I showed the possibility that the index is already in a multi-year bear market.

The same applies to the S&P 500 (SPX), and the same crucial question is: how will this multi-year bear market unfold?

Namely, looking forward to and anticipating the next few months and years matters for traders and investors. Or, as they say, forewarned is forearmed.

One of the best ways and tools to do that is by assessing the past and applying the Elliott Wave Principle (EWP). I will determine the SPX’s big-picture EWP count in this article using price data since the 1920s. Note that the S&P 500’s inception occurred in 1957, and it was the S&P 90 before that. I will apply the EWP’s rules, patterns, and past corrections to anticipate how this potential current bear market may unfold logically.

S&P 500 Monthly Chart With Detailed EWP Count
S&P 500 Monthly Chart With Detailed EWP Count

If Super Cycle III topped, how could Super Cycle IV develop?

Before I try to answer that question, I need to establish the big-picture EWP count to help me determine SC-IV’s potential future progress. The infamous 1929 top and subsequent crash into the 1932 low are by most ellioticians regarded as Super Cycle-I and II, respectively. See figure 1 above. In more detail, SC-II was a zig-zag. The subsequent five waves rally into the 1937 high was the one degree lower Cycle-1 wave. C2 bottomed in 1942 and was also a zig-zag. (Blue) Primary-I topped in 1946 (yes, the market rallied >100% during World War II, as it already sniffed out Germany would lose, aka the Markets are forward-looking), and P-II was another zig-zag. We can see An impulsive advance into the 1968 high from that low. Then the index went through a six-year-long sideways consolidation. In EWP terms called an irregular, expanded flat wave (IV). Flat corrections consist of three waves: A-B-C. The internal structure of each wave is 3-3-5. In Bull markets, the B-wave of an irregular flat makes a new ATH.

From the EWP, we know that in an impulse, five comes after four, and the market embarked on P-V, which topped in 2000 to complete C3. Another almost decade-long sideways consolidation happened: Cycle 4. This wave was also an irregular expanded flat, with the 2007 ATH the B-wave top. Cycle-4 bottomed in March 2009, and since then, we have come to enjoy C5 of SC-III. The index went through two more flat 4th waves between then and now. The smaller one (2015-2016) was a regular flat, whereas the larger one (2018-2020) was -once again- an irregular expanded flat. The COVID crash was the C-wave of that flat. The subsequent rally from the March 2020 low was Primary-V of Cycle-5 of Super Cycle-III. The latter may now have topped, meaning Super Cycle-IV is underway.

Given the rule of alternation in the EWP:

if Wave 2 unfolds as a simple ABC correction, probabilities favor Wave 4 is more likely to unfold as a complex correction. And vice-versa, if Wave 2 is complex, Wave 4 will likely unfold as a simple ABC pattern.

In this case, I established all the 2nd waves (SC-II, C-2, P-II) were simple zig-zags and all fourth waves (P-IV, C-4, M-4, P-IV) were complex flat corrections. Thus based on this pattern, it is logical to assume the current SC-IV wave will also be complex: a flat.

At this stage, one cannot know if SC-IV will become an irregular expanded flat, meaning wave-B of IV will make a new ATH or only a regular flat (A=B=C). However, based on the historical evidence, it will likely become irregular and expand flat. The B-wave can reach as high as SPX5000-5500 and satisfy my long-standing call for this price level.

if the 3rd wave doesn’t reach the ideal upside target, the B-wave will do the trick.”

Besides, if SC-IV follows the prior 4th waves paths, I expect SC-IV to ideally bottom between $2420-1850. Based on the timeline of these previous 4th waves, I expect SC-IV to last potentially up to a decade.

In more detail, wave-A of SC-IV has then just gotten started, and the first leg lower (wave-a of A) should wrap up soon, to be followed by a multi-month relieve rally/dead cat bounce (wave-b of A) before the next leg lower starts (wave-c of A).

Once wave-A completes, wave-B can reach as high as SPX5000-5500, as shown in the above chart, but it will take much longer than originally anticipated.

Can S&P 500 Reach 5000+ Amid Bear Market? 
 

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Can S&P 500 Reach 5000+ Amid Bear Market? 

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Comments (37)
Zsombor Komán Birtalan
Zsombor Komán Birtalan Jun 24, 2022 12:53PM ET
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he tries pumping so hard
Levent Okten
Levent Okten Jun 20, 2022 4:49PM ET
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The indexes are getting lower than pre-pandemic levels . Actually if there was no pandemic in two years , indexes were going to be a little higher than present level . After subtract Ukrainian war and with gradually decreasing effects of pandemic US economy looks healthy and gradual increase should be expected , i think .
Joseph Obrzut
jzut Jun 20, 2022 1:37PM ET
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Market always tells you what you SHOULD'V'E done. 5000? Not this year. But probably eventually. History shows you that. Nibble when we have corrections.
Murali Krishna
Murali Krishna Jun 20, 2022 10:22AM ET
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This guy is really a genius Biden. I mean just genius. Look at the work he has done. I don't know from where he gets that intelligence
Fa Cai
Fa Cai Jun 19, 2022 6:24PM ET
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Dr. Arnout ter Schure, Please keep doing your wonderful posts. Your Numbers Always confirm mine, though, I used a Totally differenct way/system/formula of my own.
murray cooper
murray cooper Jun 19, 2022 1:16AM ET
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... and the answer is :=  {drum roll} ..... ....  the market will continue to do what it has always done .... keep you guessing !!! .... {thinks :=  hhmmm  Now what happens if I move my starting point back to the turn of the 20th C or forward to some other major point in time ....}  bc you still cannot say if this is a bottom, reversal or continuation ... and provide a level and a date for the next one !!!  No matter how much alphabet you throw at it ...   and bc not one Technician said in December  "Quick get out now !!!!"   The "Top" is coming 20% downside immediately ahead !"  Good luck everyone else ....
Jeff Page
Jeff Page Jun 18, 2022 9:20PM ET
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What do the charts tell you about the Fed tightening and lower earnings?
خالد ابن نصار
خالد ابن نصار Jun 18, 2022 6:17PM ET
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Nick Sklikas
Nick Sklikas Jun 18, 2022 4:20PM ET
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only if Bitcoin gets back to 60k. doubtful.
Terry Langley
Terry Langley Jun 18, 2022 2:42PM ET
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I got sea sick....what genius
 
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