The S&P 500 is approaching its all-time high of 6,151. It continues to follow an Elliott Wave impulse pattern, now extending in wave (iii).

Previously, on reaching $5,900, a rally to 6,151 was anticipated. Attention is now towards an expected decline as part of wave (iv), with a possible reduction of around 5-7%, similar to the 7% drop seen in April.

Potential Impacts of Wave iv

Until this decline materialises, wave (iii) could extend further. Expected market reactions include possible bearish pressure and potential panic buying if a breakout occurs above 6,151.

SPX remains in an upward trajectory, with wave (iv) projected to have a mild retreat. Caution is advised when trading leveraged products due to inherent high risks.

Engaging with foreign exchange on margin requires careful consideration due to potential substantial losses. A thorough understanding of risks is essential before trading. Always consider consulting a financial advisor if uncertain about the risks involved.

As it stands, the S&P 500 continues to ride an extended bullish move, which we’ve identified as wave (iii) in the broader Elliott Wave structure. Traders familiar with this price action sequence will recognise that wave (iii) tends to be the strongest leg in an impulse cycle, often running longer than expected before giving way to corrective behaviour. What’s worth noting here is that the index is inching closer to its former top near 6,151—an area that, besides being a psychological level, might also act as a resistance if too many participants begin to rotate into profit-taking.

Historically, we saw a similar inflection forming when the index touched 5,900, sparking a climb that met many technical projections. Now, however, the narrative shifts. If past behaviours prove a useful guide, then a pullback becomes increasingly plausible, possibly as part of wave (iv). This next movement, anticipated to be a corrective phase, could bring about declines in the 5% to 7% range—modest perhaps when compared with broader sell-offs, but still material enough to impact short-term positioning, particularly for those holding short-dated options or high-leverage derivatives.

Risks and Market Dynamics

What makes this phase tricky is that until the anticipated correction begins to manifest clearly on the charts, wave (iii) remains live and potentially unfinished. Should momentum continue to build, especially with any decisive close above 6,151, it could trigger widespread reactive buying, pressing volatility markets into uncharted territory. Johnson, who highlighted the pattern earlier this quarter, warned that breakout levels might lead not to euphoria but to confusion—where participants react not with confidence but haste, elevating execution risks.

Under these conditions, we’re seeing increased sensitivity in SPX-related contracts. The bulls have control for now, but the potential transition to wave (iv) may catch some offside. For those placing directional trades or spreads with convex payoffs, managing delta and vega exposure is going to be a top priority over the coming sessions.

What we’ve been focusing on in the near term is neither predicting the exact timing of wave completion, nor dismissing the current trend. Instead, we are refining exposure in a way that controls downside while remaining ready to take advantage of short-volatility setups during any knee-jerk pullbacks. It’s not about contracting the tradebook entirely, but about targeting positions with asymmetric reward and timing entry around clearer confirmations.

Worth reiterating—handling leveraged contracts, especially within indices or FX on margin, is a game of both precision and patience. Once corrections begin, they often feed into volatility spikes, making pricing erratic and spreads less forgiving. This naturally raises the difficulty in applying intraday strategies or rolling synthetic positions. For our part, we’re dialling in to known support zones and watching breadth indicators in parallel. The better they hold up during minor retracements, the cleaner the signal we’ll get when building back into longer-duration positions.

Miller’s observations about liquidity tapering into monthly expiries have held true recently; that behaviour could extend into July. If that’s the case, then temporary air pockets in liquidity may accompany the start of wave (iv), creating sharper price responses than fundamentals would justify. That’s something we’ll be actively modelling over the sessions ahead.

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