Figure 1. Our EWP-Based Trading Return in 2024 for the SP500.
There Are Two Ways to Get to $6280-6360
We, therefore, continue to assign the index’s advance since the August 2024 low an Ending Diagonal (ED) structure. As a reminder, an ED’s waves (i–ii–iii–iv–v) comprise three waves: 3–3–3–3–3 = abc–abc–abc–abc–abc. Besides, W-iii typically targets the 123.60% extension of W-i, measured from W-ii. The W-iv then tends to correct back to the 61.80% extension, after which the last W-v targets the 161.80% extension. Since, so far, the index is running a bit ahead, e.g., it held the 76.40% extension, we now anticipate it is more likely to reach the 176.40% extension at $6363. See Figure 2 above. But, as always, we will monitor the advance to narrow down the red W-v target zone.
For now, we have had a 192p rally from the January 2nd low, and as long as that low holds, we must assign the rally to the (subdividing) red W-v. The warning levels for the Bulls are marked on the daily chart, with a first warning on a break below last Friday’s close, etc.
The alternative (blue Alt: a, Alt: b, Alt: c) is that the red W-iv will become protracted, with the current rally most likely stalling out at around $6050+/-25 once again, followed by another leg lower to the red W-iv target zone. A break below the orange warning level of $5868 will strongly suggest this.
However, we slice and dice it; over the intermediate term, the index is most likely not yet done to the upside, and even after a possible last leg lower better into the ideal $5735-5810 target zone, we can still expect a rally to new all-time highs. But please note that once the $6200+ region has been reached, a much larger correction, if not an outright multi-year Bear market, can start.
