close icon

Elliott Wave Setup Sends S&P 500 12% Higher

What will the S&P 500 bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!

As demonstrated in our previous article about the S&P 500, the stock market started climbing while the economy looked the weakest. Then, as the markets kept rising, a new conundrum occurred. How to explain the extremely wide disconnect between the stock market and the economy?

GDP forecasts for Q2 are all over the map, ranging from -30% to -53% decline. Unemployment for the month of May was expected to reach levels last seen in the Great Depression of the early 1930s. Yet, the market just kept going higher and higher.

On Friday, May 15th, the S&P 500 closed at 2864, but most analysts thought it was just a matter of time before it revisits the March lows. After all, how can the market rise when the economy is in such a bad shape, right? Except that experienced investors know that the habit of the market is to anticipate, not to follow.

Staying Ahead of the S&P 500 Surge Amid the Deepest GDP Dive on Record

So instead of looking at the economy in the rear-view mirror, we decided to look for Elliott Wave patterns with predictive value. It didn’t take a lot of time to find one. Before the open on Monday, May 18th, we sent the chart below to subscribers.

A Bullish Elliott Wave pattern emerged in the S&P 500 on May 18th

The hourly chart of the S&P 500 revealed a textbook 5-3 wave cycle to the upside. A five-wave impulse, labeled 1-2-3-4-5, was followed by a shallow but clear a-b-c zigzag correction. According to the theory, it was time for another rally.

Three weeks ago, the economic output of the United States was (and still is) expected to be cut roughly in half in Q2. The unemployment rate was predicted to approach or even exceed 20%. Yet, the stock market was sending a very bullish message through its Elliott Wave patterns. This is what happened next:

S&P 500 index surges 12% in three weeks

In the three weeks that followed the S&P 500 index surged by 12%. On Friday, June 5th, it touched an intraday high of 3212. The May unemployment rate came in better than feared, but as usual, waiting for the good news to arrive meant paying a higher price to get in.

What will the S&P 500 bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Nifty 50 Index – Assessing the Fifth Wave’s Progress

In our previous article about the Indian Nifty 50 index we expressed an opinion that its uptrend cannot be trusted for much longer. Our skepticism was based on the benchmark’s weekly chart, which revealed a clear impulse pattern. A three-wave correction follows every impulse, so with the price around 13 500, we thought it was…

Read More »

S&P 500: Turning Bullish While the World Fell Apart

We find it hard to describe the past twelve months. What a year it’s been. A little over a year ago, the world was in utter panic. No-one really knew what is going on nor what was going to happen next. The prevalent emotion across the globe was fear. In the financial markets that fear…

Read More »

NZX 50 Index On the Verge of a 40% Elliott Wave Drop

NZX 50 is New Zealand’s benchmark stock market index. It was created in 2003 and includes the 50 largest companies in the country. We stumbled on it while researching one of its components – The a2 Milk Company – but that’s another story. NZX 50 climbed to almost 13 000 earlier this month, up 58%…

Read More »

Nifty 50 Index Can Severely Injure the Bulls in 2021

The U.S. S&P 500 index is up 67.6% since its March low. The Indian Nifty 50 did even better than that. The benchmark index of the second most populous country has climbed 79.4% from its 7511 bottom nine months ago. It currently trades slightly below 13 500, not far from its recent all-time high of…

Read More »

DJTA: Putting 50 Years of Data in Elliott Wave Context

Just six months ago, it felt as if the world was coming to an end. People in Europe and the USA were stockpiling necessities in preparation to isolate themselves for an unknown time period. The coronavirus panic had dragged stock market averages down 35-40% in just a month. It was the fastest plunge into a…

Read More »

DAX 30 Surged 50%+ in Three Months. Here is Why

THIS WEEK ONLY, in addition to the seven premium instruments, all our subscribers will receive ONE Elliott Wave analysis of DAX 30 as a BONUS. Subscribe NOW and get yours on Sunday, June 14th. The last time we wrote about the German DAX 30, the index was in a free fall. It was March 2nd…

Read More »

Insurance ETF Nearly Halves As COVID-19 Takes Toll

Maybe only with the exception of grocery stores, one can hardly find a stock not suffering from the COVID-19 disaster. Insurance companies were not spared either, so it is no surprise that the SPDR Insurance ETF (KIE) crashed, as well. This ETF, which ranks Progressive and Brown & Brown among its top holdings, lost 46.1%…

Read More »

More analyses