$SPX 12:09PM PT Elliott Wave Update — Wave 2 in progress
### $SPX Elliott Wave 12:09 PM PT Update
The S&P 500 ($SPX) has been displaying notable price movements today, providing some clarity on its Elliott Wave structure. Following a strong rally in Wave 1, the index moved from a low of 5119 to a high of 5230. However, after reaching this peak, the SPX has entered into a corrective Wave 2 phase.
#### Wave 1 Rally and Wave 2 Correction
1. **Wave 1 Rally**:
— The initial Wave 1 rally saw the SPX surge from 5119 to 5230. This move indicated a strong bullish sentiment, driven by positive market forces and investor confidence.
2. **Wave 2 Correction**:
— After hitting the 5230 peak, the index began its Wave 2 correction. Corrections in Elliott Wave theory often retrace a significant portion of the preceding wave, and in this case, the SPX retraced to the .618 Fibonacci support level.
— The .618 retracement level, a common and significant support point in Elliott Wave corrections, lies between 5190 and 5200. Today, the SPX touched the lower end of this range at 5200 and has since bounced, suggesting that this level is acting as strong support.
#### Key Levels and Market Sentiment
For the SPX to maintain its bullish outlook and proceed to a sustainable Wave 3, it needs to clear several critical levels.
1. **Immediate Resistance**:
— The first resistance level to watch is 5230, the recent peak from Wave 1. Clearing this level would signal that the index has potentially completed its Wave 2 correction.
2. **5290 Resistance**:
— More importantly, the SPX needs to break through 5290, which represents the .786 retracement level of the entire drop. This is a crucial hurdle that must be overcome for any chance of a sustainable upward Wave 3.
#### Potential Wave 3 Target
Assuming the SPX can clear these resistance levels, the next move would likely be Wave 3, which is typically the most powerful and extended wave in Elliott Wave theory. Given the strength of the initial rally and the subsequent correction holding at a significant support level, a breakout above 5290 could signal the start of a robust upward move.
1. **Wave 3 Projection**:
— Wave 3 often extends 1.618 times the length of Wave 1. If we apply this to the current structure, the SPX could see a substantial rally. However, the exact target will depend on the final low of Wave 2 and the initial high of Wave 1.
#### Market Sentiment
The market sentiment is currently mixed. The initial rally suggests optimism, but the subsequent correction indicates caution among traders and investors. The bounce off the .618 retracement level at 5200 is a positive sign, suggesting that buyers are stepping in at this critical support.
However, for the bullish scenario to unfold, the SPX needs to demonstrate sustained buying pressure and clear the resistance levels outlined above. Market participants will be closely watching these levels for signals of the next significant move.
#### Conclusion
The SPX’s price action today is pivotal. The Wave 2 correction appears to be finding support at the .618 retracement level, and the index is poised for a potential breakout. To confirm the start of Wave 3, the SPX must clear 5230 and more importantly, 5290.
If these levels are breached, we could see a strong and sustainable rally, marking the beginning of an upward Wave 3. Conversely, failure to break these levels might lead to further consolidation or a reevaluation of the current wave structure. Traders and investors should remain vigilant and prepared for both scenarios as the market dynamics unfold.