The SP500 index, according to the Elliott Wave Principle, was set to pull back in early December before rising again. On December 10, the index dipped to 6824 but didn’t hit the projected range of 6930-7010. Currently, it’s trading around 6830, after falling below three important warning levels. The Advance/Declining line hit a new all-time high on December 11. This indicates that a bear market isn’t likely to start soon. If the index stays above the November 21 low of 6720, it could keep climbing, potentially reaching 7490 by late April 2026. This prediction aligns with historical patterns, including midterm election year trends peaking around April 18 and Armstrong Pi-cycle turn dates pointing to April 28.

Anticipated Market Trends

Previous top cycle predictions have pointed to major market corrections. If the November low holds, the bull market may continue until next April. However, a drop below 6720 could signal the start of a bear market. According to Dr. Arnout Ter Schure, the bull market could reach a maximum value of 7760. We believe the recent pullback in the S&P 500 is a chance to buy before the next big upward move. The index is now around 6830, having found support near 6720 on December 16. We see this as a temporary break in a larger bull market, not the start of a bear market. The crucial level to watch is 6720, which was the low on November 21 and was tested again this week. As long as the index stays above this price, we maintain a positive outlook. Breaking below this level would suggest a significant decline may be starting.

Technical Analysis and Market Breadth

This analysis is backed by improving market breadth, as the Advance/Decline line recently reached a new all-time high, showing broad participation in the rally. Recent economic data is also encouraging, with the latest Consumer Price Index report for November 2025 showing inflation cooling to an annual rate of 2.8%. This eases pressure on the Federal Reserve regarding rate hikes and supports stock valuations. Based on seasonal trends and cycle analysis, we anticipate a potential market peak around April 2026, targeting up to 7490. Historically, midterm election years show strength in the second quarter, similar to the trend that correctly predicted the major market top in January 2022. The CBOE Volatility Index (VIX) has also dropped to 17 after a brief spike, suggesting that immediate fears have lessened. For traders, this outlook supports buying call options with expirations in mid-2026 to benefit from the expected rise. A move towards levels above 7400 would make calls struck at 7000 or 7200 very profitable. Using bull call spreads could help manage risk while keeping upside potential. Risk management should focus on the 6720 support level. A clear drop below this price would challenge the immediate bullish view and indicate a need to exit long positions. Traders might also think about purchasing protective put options with strikes just below 6720 to guard against unexpected downturns. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now