The S&P 500 index (SPX) has been very strong, even post-correction. Consequently, even the most bullish analysts are scaling back their rally targets and positive expectations. SPX futures just a few weeks ago made all-time highs, trading above 6700. It’s certainly on track for even bigger gains, but a correction may be due soon. Despite the index’s unusual recent behavior, our advice to traders everywhere is to stay alert because market dynamics are always changing.
On the SPX high of 6699 on the 23 rd , we saw a very powerful rally that was capped with an upside target of 6690+/10+. A pullback was expected, primarily in the 3-5% range. The real decline from this peak turned out to be just 2%, leading to a faster retreat than anticipated. This surprise strength has caused many experts to retrace their steps on where they thought the housing market was headed.
Current Market Dynamics
The latest rally from last week’s low is interpreted as the orange W-5 of the gray W-v of the green W-3. This technical analysis illustrates that SPX made a major high of 6699. In terms of wave structure, it is orange W-3. SPX 6776 level has been an obsession for analysts, as it has turned into the price action magnet. This short-term level near the extension is in perfect lock-step with the next higher wave-degree (green) 300% Fib extension level at 6815.
The new target for the SPX is now 6800 ± 25. Analysts point out that the moment this milestone is passed, chances of a later-day correction are even stronger. Such a correction would be described as a green W-4 retracement, to be expected after hitting the target zone. Analysts predict the sweet spot for this possible correction to land in a range of SPX 6150 and 6375. They throw some weight towards the high end of this scale.
Historical Context and Future Projections
The SPX’s recent performance can be traced back to market movements starting from August 20, rather than September 2 as initially thought. This change of sequence in time serves as an example of how price action can prompt changes in interpretational direction in wave analysis. The index’s fluctuation from a peak of 6699 to a low of 6569 on September 25 has underscored the volatility inherent in the current market environment.
Even with these dips, the overall mood is still positive. The last major rally should top out around SPX 7120. This would be a historic completion of the Bull market that started in 2022. Even if the market takes a few step backs, analysts point out that the long term picture is bright with uptrending movement.