9:40AM - S&P Elliott Wave Update For 1.13.26 - Upside W3 targets on breakout

S&P 500 Enters Wave 3 Breakout as Structure Confirms Higher Targets

The S&P 500 is now displaying a textbook Elliott Wave structure that strongly supports higher prices in the near term. After consolidating earlier this week, price action has confirmed that the market is transitioning from corrective behavior into an impulsive advance — specifically, a Wave 3 breakout, which is typically the strongest and most profitable phase of an Elliott Wave cycle.

The initial rally began with a Wave 1 advance from 6900 to 6980, marking the first impulsive move off the recent lows. This rally was decisive, broad-based, and showed expanding momentum — all classic characteristics of a Wave 1. Importantly, the move established the directional bias and set the framework for the entire structure that followed.

As expected after a Wave 1 advance, the market then entered a corrective Wave 2 pullback. The decline retraced precisely to .618 Fibonacci support at 6935, a level that is widely monitored by professional traders and Elliotticians. This retracement was orderly, overlapping, and corrective in nature — further reinforcing that the prior move was impulsive and that the larger trend remained intact.

Yesterday’s low at 6935 proved to be the key inflection point. Price reversed sharply from this .618 support zone, confirming that sellers were unable to push the market into a deeper correction. This reversal is critical because Wave 2 corrections often serve as the final shakeout before a powerful Wave 3 begins. That is exactly what has unfolded.

The subsequent advance off the 6935 low now confirms that the S&P has entered a Wave 3 breakout phase. Wave 3 is typically the strongest, longest, and most dynamic wave in the Elliott Wave sequence. It is driven by expanding participation, improving sentiment, and increasing momentum as more market participants recognize the trend.

Using standard Fibonacci projections, the most common target for a Wave 3 is 1.618 times the length of Wave 1. Applying that measurement to the current structure yields a price target near 7100 for this advance. This level represents the logical upside objective as long as the Wave 3 structure remains intact and price continues to hold above prior support zones.

From a structural standpoint, the market is behaving exactly as it should during the early stages of a Wave 3: higher highs, higher lows, strong upside momentum, and limited downside follow-through. As long as the S&P remains above the 6935–6950 support region, the bullish wave count remains valid.

In summary, the S&P 500 has completed a clean Wave 1 and Wave 2 sequence and is now breaking higher in Wave 3, with 7100 as the primary upside target based on Fibonacci extension analysis. Until proven otherwise by a structural breakdown, the path of least resistance remains higher.