Elliott Wave Analysis: Will the S&P 500 Stay Trapped In Range?
Elliott Wave Analysis: Will the S&P 500 Stay Trapped In Range?
Stock market rebound over the last two weeks started after Trump decided to put some of the tariffs on a 90-day pause, and most recent annoucmenet talks with China have already begun. If some of the recent tariffs are also removed by China, this would be very positive for sentiment moving forward, as both countries seem to be working toward a deal that could benefit both sides.
What’s interesting is that the S&P 500 bottomed right at the trendline support connected from the 2022 lows, and this happened with extreme volume down there, while VIX and fear indicators also hit extreme levels. The market was heavily buying puts at that time, and usually when sentiment is at extremes, that’s when markets can reverse—so I’m not surprised to see this strong bounce holding for the last two weeks.
That said, I’m still not convinced that this is the start of a new bullish trend. As we discussed with Dale yesterday in our FACE webinar, the key level for a potential short-term recovery toward 5790 would be a confirmed breakout above 5500—which was recently retested. But even if we get that recovery, I don’t yet see it as a full return to all-time highs, especially if you look closely at the overlapping price action from the 4800 lows. This tells me we’re still in the middle of a complex Elliott Wave correction. However, that doesn’t mean the 4800 level must be retested, as corrections can also be more sideways in structure rather than deep. In that case, a triangle scenario is something we also need to consider, with 5800 possibly acting as a very important resistance.
So for now, I believe the pause we’ve been in since February will continue—possibly lasting longer in time, not necessarily going deeper in price. But if I had to project when more bullish developments might emerge, it could be during the summer, especially as Trump’s 90-day tariff pause expires, which could bring more clarity and potentially more positive news and deals till then.
If all needed subwaves for the correction complete by then, we could see a very interesting shift later this year. So for now, I remain neutral but aware of a possible 200–300 point rise if 5500 is taken out. On the downside, key short-term support levels to watch are 5080 and the 5000 round figure, just below the wave X swing low from April 21.
Have a nice weekend.
Grega
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