12:19PM ET - S&P Elliott Wave Update [FREE 500 Word Article]

S&P 500 Completes ABC Zigzag and Sets Up Potential Breakout Toward 7,000

The S&P 500 delivered an important technical development today, signaling that the recent correction may be complete. After several sessions of downside pressure, the index reversed sharply off yesterday’s low, a move that aligns perfectly with the completion of a full ABC zigzag correction. This reversal was not random or purely news-driven; it followed a textbook Elliott Wave structure that often precedes powerful countertrend and trend-resumption rallies.

Breaking down the structure, the decline unfolded cleanly in three major legs. Wave A initiated the pullback from the highs, Wave B produced a corrective bounce that failed to regain upside momentum, and Wave C delivered the final selloff. Crucially, Wave C itself subdivided into five distinct waves, which is a key requirement for labeling a correction as complete. The presence of a clear five-wave decline within Wave C strongly suggests that downside momentum has run its course, at least for this corrective phase.

The market’s reaction following the completion of those five waves is telling. Instead of continuing lower or consolidating weakly, the S&P reversed hard, reclaiming intraday levels rapidly and closing well off the lows. This type of price behavior is often seen when selling pressure becomes exhausted and late shorts are forced to cover. In Elliott Wave terms, it frequently marks the transition point where the market shifts from correction back into impulsive mode.

From here, the most important level to monitor is 6,900. This is not just a psychological round number, but a technically critical zone. A move above 6,900 would place price above the prior B wave high, which is a strong confirmation signal that the ABC correction has fully resolved. When price regains the B wave high after an ABC decline, it often indicates that the market is entering a new impulsive advance rather than just staging a temporary bounce.

A daily close above 6,900 would significantly improve the bullish outlook. Such a close would suggest that the recent move is more than a short-covering rally and instead the early stages of a new upside leg. In that scenario, upside momentum could accelerate quickly as sidelined capital re-enters the market and bearish bets are unwound.

If this breakout confirmation occurs, the path toward 7,000 opens up rapidly. From a Fibonacci and structural perspective, 7,000 represents both a psychological milestone and a logical near-term target following the completion of the correction. Given the strength of today’s reversal, a push toward 7,000 as early as next week becomes a realistic possibility rather than an optimistic projection.

It’s important to note that even in bullish scenarios, markets rarely move in straight lines. Minor intraday pullbacks or brief consolidations can occur near resistance, especially as traders take profits from the rebound. However, as long as 6,900 is reclaimed and held on a closing basis, those pullbacks would likely be corrective rather than the start of a renewed decline.

In summary, the S&P 500 appears to have completed a full ABC zigzag, capped by five waves down in Wave C, and has now staged a decisive reversal. 6,900 is the key confirmation level, and a close above it would strongly favor a continued rally with 7,000 as a near-term upside objective. If confirmed, today’s reversal could mark the beginning of the next bullish phase rather than just another fleeting bounce.