SPY rose from the April 7, 2025 low in wave ((1)) and reached $697.87 on January 28, 2026. It then fell in wave ((2)) to $629.23, correcting the whole move from April 2025, before turning up into wave ((3)).
A move above $697.87 is still needed to remove the risk of a double correction. The rise from $629.23 is mapped as an impulse Elliott Wave structure.
Wave Structure From The April Low
Wave ((i)) climbed to $658.52 and wave ((ii)) pulled back to $644.16. The next phase points to further gains to complete wave ((iii)).
After wave ((iii)), a wave ((iv)) pullback is expected to correct the cycle from the April 2 low, before a final rise completes the sequence. The near-term upward case remains in place while $629.23 holds.
With the market showing strength above the $629.23 pivot, we see an opportunity for income-generating strategies. Selling out-of-the-money puts, particularly with expirations in the coming weeks, allows traders to capitalize on time decay while expressing a bullish-to-neutral stance. This approach aligns with the view that any near-term weakness should find buyers, as long as that critical low from earlier this month holds.
This technical setup is supported by the recent March 2026 CPI report, which came in at a manageable 2.8%, suggesting inflationary pressures are contained for now. Furthermore, with the VIX falling to a multi-month low of 14.5, the cost of options has decreased, making bullish positions more affordable. A steady unemployment rate of 3.6% also provides a stable economic backdrop for further market gains.
Options Strategy Levels And Targets
For those targeting a move toward new all-time highs, buying call options or establishing bull call spreads offers a direct way to participate in the expected wave ((3)) advance. We are watching the previous high of $697.87 as a key level to overcome, with strikes around $700 and $710 becoming attractive targets for May and June expirations. A decisive break above that peak is needed to confirm the trend and remove the lingering risk of a more complex correction.
Looking back at the market action following the lows in late 2023, we observed a similar pattern of a sharp recovery followed by brief consolidation before the next major leg higher. That period also saw traders successfully selling puts on dips, reinforcing the idea that in a confirmed uptrend, pullbacks present opportunities. We believe the current structure presents a comparable setup for derivative traders to follow.
