SP500 – Daily Analysis
In today’s Daily Report, we break down the market’s internal mechanics, highlight the signals developing across key timeframes, and identify the levels that could trigger the next decisive move.
CANDLES
The pullback we discussed in the weekly report happened. But it was very modest, and it did not achieve the main goal — normalization of the technical backdrop. From a technical perspective, there is a higher probability that it is not done yet.
The daily candles formed potential bearish reversal candles across all indices, with SPY forming the most classical, and thus the most concerning, bearish Harami Cross. IWM’s candle was not as strongly bearish, but it locked the third gap in the wave, which raised the risk of reversal.
On the larger frames, the 15D, which closes tomorrow, will likely be bullish, similar to the formation in spring 2025, unless there is a 5% drop tomorrow, which seems very unlikely. The weekly and some other mid-term frames are healthily bullish.
At this point, the only risk is a continued short-term pullback. It remains to be seen whether it develops into something bigger.
Elliott Waves
Possible Impulse
At the micro level, the first wave off the top is developing and still has chances to be clearly corrective or to start morphing into a larger-degree impulse. So far, all advances have been corrective, implying a continued move down in search of lower lows.
Mid Term
Both the green and purple counts remain on the table, with the purple count still primary for the technical reasons discussed on April 15.
When comparing all major indices, the wave divergence between NQ/SPX and the Dow remains the main unknown. As discussed in the weekly report, the Dow has not made a new ATH yet, and it has more inherent risks.
SUMMARY
SPX remains bullish on the larger frames, but the short-term pullback likely is not over yet. The technical backdrop still needs more normalization, and the recent daily action increased the odds of another move lower.
From the Elliott Wave perspective, the purple count remains primary, while the developing wave off the top still looks more corrective than impulsive for now.
Overall, the current weakness appears short-term in nature, though it still needs to be monitored closely in case it starts developing into something larger.
