S&P 500 Update: 4300 Next?

One day after the S&P 500 had topped at $4195 on February 2 (see here), our primary expectation based on the Elliott Wave Principle (EWP) was a focus on:

“the $4100 region for a smaller 4^th wave bottom to ideally allow the index to rally to $4260+/-10. The index will have to break below…$4015 with a first warning at $4039 to tell us the Bullish path is in jeopardy."

Besides, since we have been anticipating this path since at least October last year, we urged readers to:

"Please focus on the forest, not the trees. Follow the index's price and well-documented EWP patterns, not the emotional hype du jour or some assumed narrative regarding what the market should or should not do, and you will be on the right side most of the time."

Albeit it was a little lower than ideal, we were correct as the index bottomed on Friday, February 10 at $4060, which is less than 1% away from the ideal $4105+/-5 target zone. Today the index is already in rally mode. Hence, the green W-4 we anticipated ten days ago has likely already bottomed, and the green W-5 to ideally $4260+/-10, possibly as high as $4295+/-10, should be underway. See Figure 1 below.

Figure 1

Thus, since the EWP is based on the fractal nature of the financial markets, we now know that as long as Friday's low at $4060 holds, we should see the current rally from that low as a smaller W-i of W-5. Thus a minor W-ii pullback, possibly on tomorrow's CPI report, to $4100+/-10 should ensue, from where W-iii, iv, and v of green W-5 should kick in.

Bottom Line

Ten days ago, our focus was on the $4100 region for a smaller 4^th wave bottom to allow the index to rally to ideally $4260+/-10 for a minor 5^th wave. On Friday, the index bottomed at $4060, and as long as that low holds, with today's rally, it appears this minor 4^th wave is completed, and the 5^th wave should be underway, possibly to as high as 4295+/-10. This 5^th wave should subdivide into five smaller waves, and a quick pullback to around $4100+/-10 should not be unexpected.

Lastly, just a friendly reminder, we stated one can have tremendous foresight from using the EWP. The mere fact the index topped and bottomed almost precisely where we thought it would many days in advance is proof of our point.