Thursday, 31 March 2016

S&P 500 rally continues, 3 most likely possible paths for coming months illustrated

The S&P 500's rally continued Wednesday. Daily chart illustrates. All charts include all sessions trade.

I think the S&P 500 has three most likely possible paths in coming months, illustrated below on weekly charts with their respective Elliott Wave counts. I don't claim to be able to objectively rank them in order of likelihood. All illustrated scenarios call for a decline from nearby current levels.

First possibility is that a five wave rally to new highs has begun, with a wave 2 correction due next, then waves 3-4-5 onwards and upwards. To many this probably "feels" the most likely of my illustrated possibilities due to the recent strong rally.

Second possibility is that the market will continue a sideways correction for several more months before beginning a rally to new highs. This scenario has many different possible permutations for wave Y, and I have only illustrated one below. A fresh low as shown is not required, depending on what form wave Y takes. FWIW my gut currently favours the scenario illustrated below.

Third possibility is that the market is near to completing a wave 2 rally, and will next begin a fierce 3rd of a 3rd wave lower, to be followed by further decline in a sequence of 4th and 5th waves. This probably "feels" the least likely scenario, but it cannot be ruled out.


  1. Noob, question: w the short bounce at 50% retrace, is that a typical pattern for retracement?

  2. Do you mean wave 2 in the first scenario? Yep somewhere around 50% would be typical. In any case, my "projection" lines are meant to illustrate possible form rather than precise targets.

  3. Yes, projection only, thanks. Hard to type in iOS9. Not sure why?