Insights 
VT 
The short-term analysis of the S&P 500 ETF (SPY) reveals a bullish cycle beginning from the April 2025 low, forming a five-wave impulse structure. Wave (4) concluded at 646.17, and wave (5) is progressing with a nested five-wave pattern. Wave ((i)) reached 665.13, then retraced in wave ((ii)) to 653.17. Wave ((iii)) ascended to 665.83, with wave ((iv)) dropping to 660.28, and wave ((v)) peaked at 670.23, completing wave 1.
Ongoing Bullish Movement
Following this, the ETF corrected in wave 2, forming a zigzag pattern that bottomed at 651.41. From the peak of wave 1, wave ((a)) fell to 658.93, followed by wave ((b)) rising to 668.71. Wave ((c)) subsequently declined to 651.41, finalising wave 2. The ETF has since shifted upwards in wave 3. From the low of wave 2, wave ((i)) increased to 672.99, and wave ((ii)) dropped to 663.30. A short-term pullback is expected, seeking support in a 3, 7, or 11 swing relative to 646.17. This framework indicates ongoing bullish movement, with established support levels guiding the upcoming developments.
Based on the current bullish market structure, we see the S&P 500 ETF advancing in a powerful wave 3. This suggests that traders should consider any near-term pullbacks as opportunities to initiate or add to long positions. The key support to watch is the recent low of 663.30, with a more significant floor at 651.41.
This technical strength is reinforced by positive economic data from earlier in October 2025. The latest CPI report confirmed that core inflation has fallen to a manageable 2.8% year-over-year, easing concerns about further Federal Reserve tightening. This, along with steady Q3 GDP growth of 2.5%, creates a supportive backdrop for equities.
Strategies For Derivative Traders
For derivative traders, this environment favors strategies like buying call options or selling out-of-the-money put spreads. The VIX has recently fallen to a low of 13.2, making long call premiums cheaper than they have been for months. A low CBOE equity put/call ratio of 0.58 also shows that market sentiment is decisively bullish, with traders preferring upside exposure.
We are treating the `651.41` level as the key pivot for this next move higher. This setup is reminiscent of the market action we saw in the second half of 2023, where after a mid-year consolidation, the market began a strong and sustained rally into year-end. As long as the broader support at `646.17` holds, the path of least resistance remains firmly to the upside.
