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Could S&P 500 Be Heading Back To 4000?

By Dr. Arnout ter Schure Stock MarketsJun 04, 2021 04:39PM ET
www.investing.com/analysis/could-sp-500-be-heading-back-to-4000-200584308
Could S&P 500 Be Heading Back To 4000?
By Dr. Arnout ter Schure   |  Jun 04, 2021 04:39PM ET
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Today, the S&P 500 is trading around 4220. However, it already reached 4219 on April 29. Hence, almost zero progress over a month, other than:

A) pop to 4236 on May 10,
B) a drop to 4057 on May 12,
C) back to breakeven today.

It's quite the mess, isn’t it. Luckily using the Elliott Wave Principle (EWP), one can see there’s a method to the madness. See Figure 1 below, showing the hourly chart for the SPX.

Figure 1: S&P 500 hourly chart with detailed EWP count

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Namely, the early March low rally is progressing in five (green) waves, i.e., an impulse wave. As you can see in Figure 1, (green minor) waves 1, 2, 3, 4 completed, and wave-5 should now be under way. Third waves typically top at around the 138.2 to 161.8% Fibonacci-extension of the entire length of wave-1, measure from the wave-2 low. That happened on April 29 as the 138.20% extension sits at 4214 and the index topped, as said, at 4219. We know with 100% certainty that after wave three come waves four and five in an impulse wave. Fourth waves tend to bottom at around the 76.40 to 100% Fib-extension of wave-1, in this case, 4053-4115. The low on May 12 low at 4056 was thus wave-4. In turn, this means wave-5 is now under way.

Fifth waves typically target the 176.4 to 200.0% Fib-extension of wave-1, which reside at 4318-4375. Unfortunately, the May 12 low rally overlapped as yesterday’s low at 4168 dropped below the May 14 high at 4183. This pattern strongly suggests the index completes an ending diagonal (ED, green minor) 5th wave (grey minute waves-i, ii, iii, iv, and v). EDs are pretty tricky patterns, as they overlap. The internal waves themselves consist of smaller waves that travel in threes instead of non-overlapping five-wave sequences. Please compare the current pattern with that of the first few weeks of this year (orange arrows).

Note that once a diagonal completes, the price will move quickly to where the diagonal started, just like the index did in late January. Thus, once this ED ends at around 4275-4375 to complete (black) major wave-3 with an ideal target of 4350+/-25p, we should expect a shift decline back to where it all started: 4050 for major wave-4, which could even drop as low as 3725-3850. From there, I anticipate another push higher to new all-time highs. As such, please keep the upside reward versus downside risk in mind per your preferred trading time frame(s).

Could S&P 500 Be Heading Back To 4000?
 

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Could S&P 500 Be Heading Back To 4000?

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Comments (8)
Jeff Jenkins
Jeff Jenkins Jul 23, 2021 7:11PM ET
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Can you please do a S&P500 chart update? Thanks in advance.
jason xx
jason xx Jul 10, 2021 7:41AM ET
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From article: "with an ideal target of 4350+/-25p"                                                                                                                                                                                                                                                              looks like we are about to find out exactly how good Elliot wave theory works on monday!!!
Miguel Massens
Miguel Massens Jun 20, 2021 10:16PM ET
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seems we topped out earlier, at the 150% fib off Covid March lows (4247). There's a gap in ES futures which will likely not hold. question is, will 3930 area hold...or do we get down to 3700?
Wei Yang
Wei Yang Jun 07, 2021 3:14AM ET
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Thanks for sharing
Miguel Massens
Miguel Massens Jun 04, 2021 7:04PM ET
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This is fantastic. Thanks for sharing. Note there is a major Fibonacci extension taken from 2000 and 2009 lows that points squarely to 4369! Right in the middle of your target range! This will indeed be an important top, and agree we should then have another big push later in the fall. Looking forward to your upside targets once the black Wave 4 completes.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Jun 04, 2021 7:04PM ET
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Thank you! Nice work! I like that extension target
Leon Kelly
Leon Kelly Jun 04, 2021 6:09PM ET
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Thanks DR! Low volume and weekly Hang man candle stick immaterial?
Andrew Bevan
Andrew Bevan Jun 04, 2021 4:59PM ET
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Would a similar analysis be relevant for the Nasdaq100, i.e. give up on the 12500-600 target for the short term? Today's bounce hit hard, although indexes aren't entirely on sure ground yet.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Jun 04, 2021 4:59PM ET
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Its in a different wave structure imho
Andrew Bevan
Andrew Bevan Jun 04, 2021 4:59PM ET
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Dr. Arnout ter Schure  Yes, it's complicated and not the best of periods, which has got our heads spread all over. S&P heading up, Bitcoin up? Telsa to be sold under $600 toward $400. Apple maybe down to close $100 and NSQ100 down some 7-8% to 12500-12600. As markets bounced on Friday I kept saying to myself "It's a c-wave, it's a c-wave". At the end of the day I still had questions.
Solomon Lalani
Solomon Jun 04, 2021 4:57PM ET
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Thanks Doc.  Can you please also share NQ updated chart?  Thanks
 
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