S&P 500 Alternate Elliott Wave Count 04-17-21

The daily S&P 500 (SPX) chart courtesy of Trading View illustrates an alternate wave count.

My 04/11/21 blog “Target of Opportunity” illustrated an SPX  Elliott wave count from 03/23/20 to 04/09/21 ending at a supposed Intermediate wave (3).  This count is still valid however seasonal factors make this count less likely.

“Sell in May and go away” is not a Wall Street cliché. There’s statistical evidence going back decades showing that the poorest stock performance occurs from May to October.  The second half of April and the first half of May is the time frame where a top is most likely. 

If Intermediate wave (3) is at or near termination it implies the next decline could last at least two weeks  possibly longer.  The rally after this drop would likely exceed to peak of Intermediate wave (3). A  decline and subsequent  rally could go into late May or early June, an unlikely scenario considering seasonal tendencies.

If Intermediate wave (5) is at or near termination the subsequent drop would most likely be followed by a rally that fails to exceed  the Intermediate wave (5) top.  It would also imply that the entire March 2020 to April 2021 bull move had ended  and at least a multi month bear market had commenced.

In  the near-term it doesn’t  matter which wave count is in effect,  the message from both is the same, an SPX drop of 10 to 12% could begin soon.