The Next Sustainable Rally Could Have Started Already
An upside resolution remains most likely for the S&P 500.
A fourth wave of intermediate degree probably unfolds in the S&P 500. The black and red scenarios blueprint the most likely paths. Red has slightly higher odds at the time of this write-up. Momentum diverged on all major scales. Moreover, there was disconfirming evidence in the most recent lows because breadth also weakened. Subsequently, the major US indices might have traced a higher low during the most recent weakness. Hence, there is mounting evidence of a local bottom-building process. Therefore, the red path is the base case as long as the S/R around 4292 holds. It shows how the next rally might have started already. A sustained break above 4540 shifts odds firmly in favor of the red path.
Black shows that the S&P 500 traces an irregular flat correction with more room to the downside. A final fifth wave of minute degree breaks down towards 4000 before the next rally begins. The black scenario fetches higher odds if bulls fail to break above the 4500-4550 S/R cluster. Nonetheless, the upside target remains the same despite more downside potential.
The most recent selling pressure triggered extremely bearish sentiment in US equities. The prevailing narratives motivated geopolitical risks and rate hikes as bearish catalysts. However, both will unlikely derail the bullish trend. Geopolitical crises have usually been good opportunities to buy equities during the past decades. Moreover, equities had positive returns during the fed's rate-hiking cycles. The wheels came off when the fed stopped hiking and not as they started.
The bottom line is that the S&P 500 is on target for 5000-5200. The next sustainable rally could have started already.
A fourth wave of intermediate degree probably unfolds in the S&P 500. The black and red scenarios blueprint the most likely paths. Red has slightly higher odds at the time of this write-up. Momentum diverged on all major scales. Moreover, there was disconfirming evidence in the most recent lows because breadth also weakened. Subsequently, the major US indices might have traced a higher low during the most recent weakness. Hence, there is mounting evidence of a local bottom-building process. Therefore, the red path is the base case as long as the S/R around 4292 holds. It shows how the next rally might have started already. A sustained break above 4540 shifts odds firmly in favor of the red path.
Black shows that the S&P 500 traces an irregular flat correction with more room to the downside. A final fifth wave of minute degree breaks down towards 4000 before the next rally begins. The black scenario fetches higher odds if bulls fail to break above the 4500-4550 S/R cluster. Nonetheless, the upside target remains the same despite more downside potential.
The most recent selling pressure triggered extremely bearish sentiment in US equities. The prevailing narratives motivated geopolitical risks and rate hikes as bearish catalysts. However, both will unlikely derail the bullish trend. Geopolitical crises have usually been good opportunities to buy equities during the past decades. Moreover, equities had positive returns during the fed's rate-hiking cycles. The wheels came off when the fed stopped hiking and not as they started.
The bottom line is that the S&P 500 is on target for 5000-5200. The next sustainable rally could have started already.
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