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The Elliott Wave analysis suggests that the S&P 500 (SPX) completed its first wave of a potential three-wave recovery on January 28, 2026, reaching 7002.28. A corrective phase followed, with wave 2 concluding at 6712, as observed on the one-hour chart. This analysis implies the market may now enter wave 3, which historically drives the most significant price movements in a bullish trend. Traders are closely monitoring the pattern for confirmation of a sustained upward trajectory, particularly after the recent pullback from November 21, 2025. This technical outlook is critical for traders assessing entry points in the SPX, as the completion of wave 2 sets the stage for a potential breakout. The analysis aligns with broader market sentiment that remains cautiously optimistic about equities, especially if macroeconomic data supports continued growth. However, volatility remains a risk, and traders must watch for signs of a failed wave pattern or unexpected reversals. For investors, the next key level to monitor is the 7002.28 resistance, which could act as a psychological barrier. A successful breakout here would validate the three-wave recovery thesis. Conversely, a failure to hold above 6712 might signal a deeper correction. Market participants should also track central bank policy updates and global economic indicators for external catalysts.
