Insights 
VT 
The S&P 500 (SPX) continues to maintain its bullish pattern, with forecasts suggesting it could reach levels as high as 7300 or more. This forecast is based on the Elliott Wave (EW) Principle, combined with average midterm election-year seasonality and Armstrong Pi-cycle turn dates. Current analysis anticipates the SPX potentially hitting around 7345-7490 by late April 2026, contingent on the index maintaining values above certain warning levels like 6720.
Recent data shows an almost 2% increase in the SPX since the previous forecast. Projections suggest the index might reach approximately 7100 in the near term, a potential drop to around 7015, and a subsequent rally to about 7160. While an ending diagonal pattern might develop, resulting in a lower rally, no indication of this has been observed yet. Expectations still point to a bear market akin to 2022 once the current wave finishes, prior to a larger, new multi-year rally. The warning levels, important for maintaining the bullish trend, include 6917, 6878, 6844, 6824, and 6720. These thresholds will be revised upwards if the index continues to climb.
Continuous Upward Momentum
The S&P 500 is maintaining its upward momentum, and we expect this trend to continue for the next few months. Our forecast suggests the index could reach a target zone of 7345-7490 by late April 2026. This outlook provides a clear window for bullish derivative strategies.
In the immediate term, we anticipate a brief dip toward the 7015 level before the next significant rally. This pullback represents a potential buying opportunity for traders looking to enter or add to long positions. Consider using this dip to buy call options or sell put spreads with expirations in March or April.
This bullish view is supported by recent economic data, which showed that Q4 2025 earnings grew by an average of 6.2% year-over-year, beating expectations. Furthermore, the latest unemployment claims report from January 8, 2026, showed a figure of 215,000, indicating a stable labor market that is not overheating. This backdrop supports continued market growth without triggering immediate alarm at the Fed.
Preparing For Possible Correction
However, a major correction is expected after this rally concludes, similar to the bear market we experienced in 2022. That downturn, which saw the index drop over 25%, was driven by rapid interest rate hikes. Prudent traders should start planning for a similar scenario by considering long-dated VIX calls or purchasing protective puts for the May-June 2026 timeframe to hedge their gains.
We are also observing some conflicting signals, such as a strong U.S. dollar, which can pressure profits for multinational corporations. Gold is trading near $4,500 an ounce, reflecting underlying investor nervousness about geopolitical tensions or inflation. For now, the uptrend holds as long as the S&P 500 remains above key support levels, starting with 6917.
Traders should prepare for heightened volatility around next week’s U.S. Consumer Price Index (CPI) release. The market’s reaction to this inflation data will likely dictate short-term price action. Using options to define risk through this event could be a wise strategy.
