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**S&P/DOW Elliott Wave Forecast for April 18, 2024**
The S&P 500 and the Dow Jones Industrial Average (DOW) are two of the most closely watched stock market indices globally, and their recent price action has been under the scrutiny of Elliott Wave analysts for potential bottoming patterns. Let’s delve into the Elliott Wave counts and the associated technical indicators to assess the current market sentiment and potential future trajectories for both indices:
**S&P 500 Elliott Wave Analysis:**
1. **Wave Structure:**
– **Big C Wave:** The S&P 500 has completed the 5th wave down of a substantial C wave correction that commenced approximately two months ago. This complex correction is indicative of a mature corrective phase and often precedes a potential reversal or bottoming pattern.
2. **Technical Indicators:**
– **Relative Strength Index (RSI):** The RSI for the S&P 500 is currently at an extreme low, reminiscent of the readings observed during the Wave 2 trough last year. Such RSI levels often act as potential reversal zones, suggesting that the index may be nearing a bottom.
– **Volatility Index (VIX):** The VIX is hovering around the 19-20 range, which historically has been considered a bottoming signal, especially when corroborated with other technical and wave pattern indicators.
3. **Key Price Levels to Monitor:**
– **Immediate Resistance:** For a bullish reversal to be confirmed, the S&P 500 needs to breach the 5075 level. A successful breach and sustained trade above this level would trigger a .618 Fibonacci retracement, targeting the 5160 range in the short term.
**Dow Jones Industrial Average (DOW) Elliott Wave Analysis:**
1. **Wave Structure:**
– **Ending Diagonal 5th Wave:** The DOW is exhibiting an ending diagonal pattern, characterized by five overlapping waves that typically form at the termination points of larger patterns. This specific wave pattern is often referred to as the ‘crown jewel’ of bottom formations, instilling confidence that the index might be approaching a significant bottom.
2. **Technical Indicators:**
– **Relative Strength Index (RSI):** Similar to the S&P 500, the DOW’s RSI is at an extreme low, echoing readings observed during the Wave 2 trough last year. This aligns with the ending diagonal formation, suggesting a potential reversal is on the horizon.
– **Volatility Index (VIX):** The VIX is hovering around the 19-20 range, which historically has been considered a bottoming signal, especially when corroborated with other technical and wave pattern indicators.
3. **Key Price Levels to Monitor:**
– **Immediate Resistance:** For a bullish reversal to be validated, the DOW needs to surpass the 38,000 level. Upon a successful breach, a .618 Fibonacci retracement would target the 39,000 range in the short term.
**Conclusion:**
The S&P 500 and the DOW are currently navigating critical junctures within their respective Elliott Wave structures, with both indices showing signs of potential bottoming patterns. The complex corrections and ending diagonal formations, coupled with extreme RSI and VIX readings, suggest that a significant reversal may be imminent for both indices. Traders and investors should closely monitor the key resistance levels of 5075 for the S&P 500 and 38,000 for the DOW. Successful breaches and sustained trades above these levels could pave the way for further upside, targeting the 5160 range for the S&P 500 and the 39,000 range for the DOW in the short term. As the market dynamics evolve, it is imperative to adapt trading strategies and risk management approaches to capitalize on potential market movements effectively.
