SP500 – Daily Analysis
In today’s Daily Report, we break down the market’s internal mechanics, track the signals developing across key timeframes, and pinpoint the levels that could decide the next major move.
CANDLES
SPX moved further up today, albeit on weakening technicals. It was the only major index to produce a continuation candle, while the others were likely consolidating or forming at least a short-term top.
In light of this weakness, the 2D closure tomorrow will be important. We discussed the nine green candles on this frame, and if the index does not pull back, it will print the tenth, adding to the building technical concern.
At the same time, the long-term monthly trend is tracking toward a solid bullish close, provided there is no 5%+ collapse in the final days of April. Hopefully, the Fed delivers the April 29 rate decision in line with current market expectations, which are for a hold as I type.
At this point, SPX remains bullish until signaled otherwise.
Elliott Waves
Possible Impulse
Three weeks ago, we began tracking a potential impulsive wave off the March 30 low. At this point, the technicals continue to support the hypothesis that the current wave is wave 3 of some degree.
The wave is now approaching the 2.618x Fibonacci extension, which is one of the most probable targets for wave 3. All drawdowns have been corrective so far. Once wave 3 completes, I would expect a shallow pullback for wave 4. The green count remains primary.
Mid Term
Both the green and purple counts remain on the table for the mid-term outlook, 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 previously, the Dow has not made a new ATH yet, and it carries more inherent risk.
SUMMARY
SPX remains bullish until signaled otherwise, but the rally is now showing signs of technical fatigue. The index continues to advance while other major indices are either consolidating or possibly forming short-term tops, which keeps the broader market structure less synchronized.
From an Elliott Wave perspective, the advance off the March 30 low still looks constructive and supports the wave 3 hypothesis. However, the mid-term outlook remains unresolved, with both key counts still on the table and the Dow’s continued divergence remaining the main risk factor.
