S&P 500: Multi-Day Bounce Expected
2022.04.20 13:10
Last week I was looking for a short-term low in the S&P 500 Futures at ideally 4359.21. From there I then “expect[ed] a bounce to 4500+/-25 soon from where the subsequent decline to ideally 4115+/-25 can start (green c/3). Once that target zone is reached, the index should bounce again to 4285+/-25 (4?), followed by a final decrease to 4015+/-25 (5?, c, 4).”
The S&P 500 Futures dropped to 4356.50 on Apr. 17 and have since rallied to 4447.00. See Figure 1 below. Thus, so far so good.
Figure 1. Hourly candlestick chart with detailed EWP count and several technical indicators
S&P 500 Futures Chart
How the correction continues.
Corrective price action is always fraud with lots of twists and turns, but the two-week decline since the late-March high should require a multi-day correction and so far, the current rally off the 4359 low has only lasted two days whereas the decline was two weeks.
Albeit the index has already reached the lower end of the ideal (green) minor-b/2 wave’s target zone, see Figure 1 above, it has likely only completed wave-a of b/2. Yes, B-waves consist of three smaller waves: a, b, and c. Hence, I expect a pullback to 4380-4425 for (grey) minute wave-b before wave-c of b/2 takes hold and rallies to around 4500-4570 (upper grey target zone), depending on where wave-b bottoms and how much wave-c extends (1.0x a or 1.618x a).
Bottom line
The S&P 500 futures market bottomed right where I thought it would, 4359 vs. 4356, and staged the anticipated rally. This rally should be part of a multi-day bounce and a short-term pullback to ideally 4380-4425 should now be underway before the Bulls can rally the price to 4500-4570, which fits well with my initial idea from last week of a high at around 4500+/-25. From there I still expect a decline to ideally 4115+/-25 can start (green c/3). It will require a breakout above the March high to tell me something else is unfolding. Thus, as I always say, “All we can do is anticipate, monitor, and adjust.
