The S&P500 (SPX) shows no indications of entering a bear market, despite a seven-week correction at -19.1%. The current decline does not invalidate a Fibonacci-based pattern that began in March 2020.
The index fell to $4,835, slightly surpassing the anticipated Fibonacci level of $5,116. The bullish trend from March 2020 may transition into an ending diagonal, with the recent low mirroring typical B-wave behaviour.
Predicted Target Zones
Predicted target zones for the 3rd and 5th waves differ, indicating potential upward movements of $6,738-7,121 before further corrections. The overall outlook remains stable, and no bear market is evident.
To put the existing content into perspective, what’s being suggested here is that the broader trend since the March 2020 lows is still holding intact. The S&P 500, having pulled back nearly 19.1% over several weeks, is behaving in a manner that’s not out of pattern with previous corrections. The retreat has not breached levels that would nullify the larger Fibonacci framework analysts have been tracking.
We’ve just seen the index slide slightly below the $5,116 mark to $4,835. While that may seem a bit unsettling at first glance, it’s still within reason. This sort of drop fits what we’d expect in what’s called a B-wave—essentially a temporary move within a broader uptrend. It lends weight to the idea that we could be in the middle of an “ending diagonal.” That’s a price pattern typical near the tail-end of a long uptrend, often messy but not structurally bearish unless it breaks certain key levels.
Now, what matters here is the projection of future price moves. The 3rd and 5th waves are expected to target upwards of $6,738 to $7,121. Those are fairly defined estimates, not guesses, and they suggest the trend still has fuel. They’re not implying a vertical run from here, but rather possible levels to watch as the next rallies unfold—provided support levels hold.
Trade Structuring and Timing
When we look at this from our point of view, it means traders should remain aware that current price weakness doesn’t equate to a broader downturn. It’s tempting to jump to that conclusion during a nearly 20% pullback, but the technical structure doesn’t back it up. Instead, we ought to view this spot in the chart as one that fits within a natural rhythm of the market—especially during late-stage bull structures.
Derivative strategies in the short term might need to factor in higher volatility, particularly if prices continue to hover around recent lows. However, from a directional standpoint, bullish bias remains valid so long as we don’t see failure of key support that would rewrite the bigger wave count. Hence, short-term put spreads or collar strategies aimed at protection, rather than bearish conviction, could make sense here, especially if timed around temporary rallies that lose steam near previous highs.
This setup has also added complexity to timing. The gap between waves three and five, if it’s not symmetric, may result in sharper reversals. That irregularity can trap overly directional trades, especially those that assume a straight-line return to highs. So a more cautious approach using calendar spreads or straddles might help to position for price action that’s neither trending smoothly nor breaking down hard.
Caution, not fear, is the better lens here. We continue to see that the broader momentum from 2020 isn’t broken. However, day-to-day fluctuations mean trade structuring matters more now—timing trades around earnings periods, macro releases, or technical reaction points at prior resistance zones could improve edge.
Within this context, what matters most isn’t the recent correction. It’s whether the larger wave pattern maintains its shape. As long as that pattern isn’t broken, positioning with the uptrend, even with protective elements in place, remains consistent with the current setup we are seeing.
