close icon

Another Nightmarish Week, Another Illogical S&P Surge

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 COVID-19 spreads across the U.S., the economy is teetering on the verge of collapse. Initial jobless claims came in at 6.6 million yesterday, bringing the three-week tally to nearly 17 million. The unemployment rate is estimated to have already surpassed its 2008-2009 recession level.

Economists at Goldman Sachs, Morgan Stanley and the IMF predict a 25%-30% GDP drop in Q2. Yet, against this nightmarish backdrop, the S&P 500 index rose 12% this week. The only reasonable explanation for the stock market surge can be the Fed pumping liquidity into the system by the trillions. Apart from that, with the economy falling off a cliff, the bulls’ optimism makes no sense at all.

Excepts that it makes perfect Elliott Wave sense. The chart below, sent to our subscribers before the open on April 6th, explains.

S&P 500 Elliott Wave recovery to continue

The hourly chart above revealed that the 35% coronavirus selloff was a textbook five-wave impulse pattern. According to the theory, this meant that at least a three-wave recovery should be expected. At the start of the week, the surge from sub-2200 didn’t fit that description.

So, despite all the reasons to be extremely bearish, we thought “the bulls are ready to lift the market higher.” Four trading days and over 300 points to the north later, here is an updated chart of the S&P 500.

S&P 500 keeps rising against the worst economic odds since the Great Depression

The index started rising immediately on Monday and never looked back. The price even exceeded 2800 on Thursday before the markets closed for the holidays. And while the S&P 500’s 27% recovery keeps puzzling the economic community, Elliott Wave analysis gave us an edge once again.

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:

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 »

S&P 500 Elliott Wave Analysis Giveaway

The S&P 500 crashed by as much as 35% in just one month. And while the coronavirus outbreak was totally unpredictable, the crash it caused made perfect sense. Elliott Wave is our favorite method of analysis, but as the market kept rising we decided to back it up with fundamental data. The result was a…

Read More »

S&P 500, Against All Logic, Re-Enters Bull Market

The coronavirus pandemic forced the global economy to grind to a halt. Major U.S. stock market indices made their fastest plunge into bear market in history. In less than two months, DJIA and the S&P 500 lost 38.4% and 35.4%, respectively. “The virus is just starting to spread in the United States, the market is…

Read More »

Dow Jones Transports Ready for a Rebound?

The coronavirus pandemic is wreaking havoc on the global economy. Governments are closing malls, restaurants and literally all kinds of social gathering places, and even putting entire cities on lockdown. In the meantime, stock market indices are in free fall. The S&P 500 is down 28.7% YTD and the Dow Jones Industrials lost 35.2% since…

Read More »

Three Years Ahead of the COVID-19 Airlines Disaster

As the coronavirus pandemic rages on, governments are taking measures to restrict unnecessary travel and mass gatherings. The airlines sector is probably the one being hit the hardest by the restrictions. The high fixed costs and huge debt loads of the airlines make them extremely vulnerable to economic downturns. With international and domestic travel on…

Read More »

Nikkei Down 30% on COVID-19 Fears. Time to Buy?

The last time we looked at the Japanese Nikkei 225 was on November 19th, 2019. The index was comfortably trading above 23 400 and the uptrend seemed very healthy, on the surface at least. And indeed, in December, the price reached 24 116. However, the fact that prices have been rising in the past didn’t…

Read More »

“DAX Falls on Coronavirus Fears.” It’s Not That Simple

The coronavirus outbreak is a convenient explanation for everything market-related these days. According to the media, investors across the globe panicked last week that the virus, which has taken over 3000 lives already, is going to become a pandemic. Major stock market indices in the U.S. lost roughly 14% in the past five trading days.…

Read More »

More analyses