The S&P 500 (SPX) is showing strong upward momentum, with predictions that it could rise to 7300 or even higher. This outlook is based on the Elliott Wave (EW) Principle, along with average trends seen during midterm election years and important Armstrong Pi-cycle dates. Analysts expect the SPX to reach between 7345-7490 by late April 2026, as long as it stays above important warning levels, which start at 6720. Recently, the SPX has risen nearly 2% since the last forecast. In the short term, the index may hit around 7100, dip to about 7015, and then rebound to roughly 7160. Although an ending diagonal pattern could form, indicating a weaker rally, no such signs have appeared yet. Once the current wave concludes, a bear market similar to what we saw in 2022 is anticipated before a new, multi-year rally begins. The key warning levels to watch for this bullish trend are 6917, 6878, 6844, 6824, and 6720. If the index continues to rise, these levels will be adjusted upward.

Continuous Upward Momentum

The S&P 500 is keeping its uptrend, and we believe this will persist for the coming months. We are projecting a target range of 7345-7490 by late April 2026, which opens the door for bullish trading strategies. In the immediate future, we expect a slight pullback to around 7015 before the next big rally begins. This dip presents a chance for traders to buy, either through call options or by selling put spreads with March or April expirations. This optimistic view is backed by recent economic data. Earnings for Q4 2025 grew by an average of 6.2% year-over-year, surpassing expectations. Additionally, on January 8, 2026, unemployment claims were reported at 215,000. This indicates a stable labor market that isn’t overheating, reinforcing market growth without alarming the Federal Reserve.

Preparing for Possible Correction

However, we foresee a significant correction after this rally ends, similar to the bear market of 2022, when the index dropped over 25% due to rapid interest rate increases. Cautious traders should consider preparing for a similar situation by looking into long-dated VIX calls or protective puts for May or June 2026 to safeguard their profits. We are also noticing mixed signals, such as a strong U.S. dollar, which might negatively affect profits for global corporations. Gold is currently trading near $4,500 an ounce, reflecting investor concerns about geopolitical issues or inflation. For now, the uptrend will remain as long as the S&P 500 stays above critical support levels, starting at 6917. Traders should brace for increased volatility with the upcoming U.S. Consumer Price Index (CPI) report next week. How the market reacts to this inflation data will likely influence short-term price movements. Using options to manage risk during this event might be a smart strategy. Create your live VT Markets account and start trading now.

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