The following is a rewritten version of the article authored by EWM Interactive titled “Elliott Wave Analysis of the S&P 500 – November 24, 2023”. The content has been expanded and adapted for clarity and length, reaching roughly 1000 words, while retaining the original analytical insights and structure. The credit for the primary analysis and original publication belongs to EWM Interactive.
Elliott Wave Analysis of the S&P 500 – Reassessing the Current Correction Phase
(Original analysis by EWM Interactive)
Overview
As the S&P 500 continues to recover after its correction earlier in 2023, the October rally has caught the attention of traders and analysts alike. Based on a comprehensive Elliott Wave analysis framework, this article evaluates whether the recent market behavior marks the continuation of a longer-term bull market, or merely a bounce within a larger corrective structure. The following interpretation builds upon the patterns visible since October 2022 and relies on Elliott Wave principles to deduce potential future price action.
Understanding the Context: The Larger Pattern Since the October 2022 Low
To accurately forecast market movements, Elliott Wave practitioners often focus on large-scale wave structures before zooming in to evaluate mid- and smaller-term patterns. Since the October 2022 bottom, the S&P 500 has followed a pattern that many wave analysts would interpret as a three-wave advance, which can be labeled (A)-(B)-(C).
Highlights of this development include:
– Wave (A): A five-wave advance from the October 2022 low to late-July 2023, seeing the index climb from roughly 3,500 to 4,600.
– Wave (B): A corrective structure that brought the S&P 500 back to approximately 4,100 during the September-October 2023 dip.
– Wave (C): A rally that began in late October 2023 and continues to develop toward prior highs.
Such (A)-(B)-(C) formations are classic in Elliott Wave theory and often hint at a corrective move going against the larger bear trend that began with the January 2022 peak.
The Broader Correction: Unfolding in an A-B-C Form?
While the upward structure from October 2022 onward could be bullish in isolation, the wider context positions it potentially as a countertrend move within an even larger correction that began from the highs of early 2022. Applying Elliott Wave’s corrective formations, the pattern may be a complex W-X-Y formation or a flat correction, which includes an A-B-C with irregular components.
From this perspective, the recovery may still be part of a longer-term correction, not a definitive bullish reversal. That distinction is critical for medium- and long-term investors.
Key Considerations:
– The five-wave structure into July 2023 suggests the impulse portion of the correction.
– The ensuing decline into October 2023 formed a zigzag or flat, retracing roughly 50% of the previous advance.
– The rally underway since October 27, 2023, could be interpreted as Wave C or as part of a more prolonged countertrend bounce within a correction.
Short-Term Development: What the October-November Rally Tells Us
Focusing on the daily and intraday charts from October to November 2023 provides better insight into the nature of the upward movement. The advance from the October 27 low around the 4,100 level has taken the index near 4,550, a rise of some 450 points in less than a month.
From the standpoint of Elliott Wave, this rally may be unfolding as a five-wave impulse labeled:
– Wave 1: Initial spike off the October bottom
– Wave 2: A shallow correction that held key Fibonacci retracement support
– Wave 3: A strong and extended rally carrying the bulk of the gains
– Wave 4: A consolidation or short pullback mid-November
– Wave 5: The final push upwards
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