S&P 500: Lower Highs Point to Weakening Trend

The rally from 2023 year lows to approx 7010 looks like a textbook 5-wave structure If we look at the final leg into 7000+, we see: an Acceleration + exhaustion, and my interpretation is that:

• Wave 5 completed near 7000,7100 and
• We are now in a corrective ABC phase

Where Are We Now?

From the chart, we see the:

• From the high of around 7010, currently we are trading around:6578. Thus, price has already breachedshort-term trend structure
• Pulled back to 0.236 Fib (~6485)and hovering slightly above it. What does it mean?

Well, I believe, what we are seeing now is the start of a higher-degree correction. If we follow the Fibonacci Structure

Key Levels To Watch Are:

• 0.236 → 6485(currently we are testing this zone)
• 0.382 → 6160
• 0.5 → 5890
• 0.618 → 5635
• 0.786 → 5260

So far, we have seen only a shallow correction(23.6%). Historically, after a full 5-wave cycle, corrections typically extend:

Minimum → 38.2%
Normal → 50%
Stress → 61.8%.

Therefore, I believe the 6160,5900 zone is highly probable, and 5630 is possible if the macro situation worsens (inflation + war). What I see from the charts is that:

• Lower highs forming after the peak
• Momentum weakening near the top
• No aggressive dip-buying yet

Alternate Scenario (Always Needed, as I may not be accurate)Bull Case:

• If price reclaims 6750,6800 with strong volume
• This becomes a Wave 4 shallow correction ad in that caseanother push tonew highs is possible. However, the probability for that is low given the current macro situation

Below given is my expectation (Base Case, let’s say 70% probability):

• Wave A: 7100 correcting towards ~6400,6200, then
• Wave B: Bounce to ~6600,6800
• Wave C: Final drop to 6000,5800

If it is not moving in the above manner, then the alternate scenario (25% probability):

• We could see a straight breakdown with no meaningful bounce and move toward 5600,5400.