Title: Elliott Wave Analysis of the S&P 500: Outlook as of October 13, 2025
Original Author: EWM Interactive
Adapted and Expanded by: ChatGPT
The S&P 500 remains a critical barometer of global market sentiment, and its behavior often provides insight into future macroeconomic movements. On October 13, 2025, EWM Interactive published its latest Elliott Wave analysis, presenting the ongoing structure in the U.S. benchmark index. This adaptation takes that analysis further, integrating broader market context, technical indicators, and macroeconomic insights to create a comprehensive guide for traders and investors.
Elliott Wave Theory Primer
Before diving into the current market outlook, it’s essential to understand the methodology behind the analysis: Elliott Wave Theory. Developed by Ralph Nelson Elliott in the 1930s, the theory posits that financial markets move in recurring fractal wave patterns governed by investor psychology.
Key Concepts:
– **Impulse Waves (1, 2, 3, 4, 5)**: These are directional and show the dominant trend.
– **Corrective Waves (A, B, C)**: These typically move against the dominant trend and help “reset” the market.
– **Fractals**: Each wave consists of smaller degree waves that follow a similar 5-3 structure.
– **Fibonacci Levels**: Elliott Wave Theory often incorporates Fibonacci ratios to predict wave extensions, retracements, and targets.
Understanding where the market lies in its wave cycle can help traders anticipate future price movements more systematically.
The Long-Term Structure of the S&P 500
According to the Elliott Wave analysis provided by EWM Interactive, the long-term rally that began after the COVID-19 bottom in March 2020 appears to be forming a large impulsive five-wave structure on the monthly chart. Based on the wave labeling, the market appears to be in or near completion of a fifth primary wave of a long-term (Cycle or Supercycle) wave structure.
Breakdown of Wave Progression:
– **Wave I (2020 – 2021)**: The initial recovery post-pandemic.
– **Wave II (Early 2022)**: A sharp correction coinciding with interest rate hikes and global economic uncertainty.
– **Wave III (Late 2022 – Mid 2024)**: The strongest and longest wave in the cycle, supported by improving earnings, lower inflation, and strong GDP prints.
– **Wave IV (Mid 2024)**: A complex, time-consuming correction, representing declining momentum.
– **Wave V (2024 – Present)**: The final leg of the impulse, possibly nearing exhaustion as of October 2025.
Technical Indicators Supporting the Fifth Wave Hypothesis
Apart from Elliott Wave labeling, various technical tools and signals support the idea that the S&P 500 is close to peaking in this fifth wave.
1. **Bearish Divergence in Momentum Indicators**:
– Relative Strength Index (RSI) on the weekly chart has been making lower highs, while price makes higher highs. This is a classic sign of diminishing buying pressure.
– MACD has also started to roll over, signaling momentum loss.
2. **Volume Analysis**:
– Volume has been declining throughout Wave V, suggesting that fewer participants are driving the rally.
– Accumulation/Distribution Index is plateauing, indicating a lack of strong institutional buying.
3. **Fibonacci Extensions**:
– Wave V has approached the 61.8 percent Fibonacci extension of Wave I through III.
– The 161.8 percent extension of Wave I also serves as strong resistance, aligning with current price levels.
Sentiment and Market Positioning
As the market reaches new all-time highs, investor sentiment has turned excessively bullish. The CNN Fear & Greed Index has been hovering in the “Extreme Greed” zone for several weeks, which often acts as a contrarian indicator.
Other Notable
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