SP 500: Is This a Final 5th Wave Setup Before a Bear Market?

The S&P 500 (SPX) has long been a barometer of global equity markets, and its current trajectory has sparked intense debate among analysts. As of November 2025, the index appears to be navigating a potential final 5th wave setup-a pattern in Elliott Wave theory often associated with market tops and subsequent corrections. Combined with seasonal cycle analysis, this raises critical questions: Is the SPX poised for a bear market after completing its 5th wave? Or could it defy historical patterns and extend the bull run?

Elliott Wave: A 5th Wave in Focus

Elliott Wave analysis suggests the SPX is in the final stages of a 5th wave within a larger bullish structure. According to recent interpretations, the index is in the 5th wave of the red W-c of the black W-3, with no new all-time high (ATH) yet achieved. A key technical level to watch is the November 21, 2025 low at 6720. If the SPX holds above this threshold, it could confirm a subdividing final 5th wave, potentially propelling the index toward 7490 by April 18–28, 2026.

The cycle originating from the April 2025 low has already completed wave (3) at 6920.21 and is now in wave (5), which requires a decisive break above the wave (3) high to validate the pattern. Meanwhile, the E-mini futures have been interpreted as part of a 4th subwave within a larger 5th wave structure, hinting at a corrective B wave and an extended C wave to follow. These dynamics align with the theory that 5th waves often precede reversals, as seen in historical examples like the 1987 and 2025 bear markets.

Seasonal Cycles: A Bear Market Clock?

Seasonal analysis adds another layer of caution. The SPX's recent pullback to 6824-a level below the projected 6930–7010 target range-has raised questions about its resilience. However, the index has found support near 6720, a critical level for maintaining the bullish outlook. If this support holds, historical seasonality and Pi-cycle turn dates suggest the SPX could rally to 7490 by April 2026.

Crucially, seasonal cycles point to a potential market peak around April 2026, a period historically associated with significant tops, including the early 2022 correction. This alignment with midterm election year seasonality-a period typically marked by volatility-further underscores the risks of a bear market if the SPX fails to sustain its gains. A break below 6720 would likely trigger a bearish scenario, as seen in prior corrections.

Historical Precedents: 5th Waves and Bear Markets

History offers cautionary tales. The 1973–1974 bear market, one of the most severe in modern history, followed a 5th wave completion. The SPX fell nearly 48% over 18 months, driven by the oil embargo, stagflation, and geopolitical turmoil. This bear market fits the Elliott Wave framework as wave IV in a larger sequence, with its conclusion marking the start of a new bull market in 1975.

Similarly, the 2025 bear market correction, which dropped about 21% from its peak, followed a 5th wave completion in a diagonal pattern. While less severe than 1973–1974, it demonstrated the fractal nature of market cycles, with subsequent bull moves failing to reach prior highs. These examples highlight how 5th wave completions often coincide with bear market transitions, particularly when seasonal cycles and external fundamentals align.

Implications for Investors

For investors, the SPX's current setup presents a dual scenario. On the bullish side, holding above 6720 could extend the rally to 7490, supported by both Elliott Wave and seasonal cycles. However, the risks of a bear market loom large if the index breaks below key support levels. Historical precedents, such as the 1973–1974 and 2025 corrections, suggest that 5th wave completions often precede prolonged downturns, especially when macroeconomic pressures emerge.

Traders should remain vigilant, particularly as April 2026 approaches-a period historically prone to market tops. Positioning for volatility, hedging against downside risks, and monitoring macroeconomic indicators (e.g., inflation, interest rates) will be critical. While the SPX's technical setup supports a continuation of the bull market, the alignment of 5th wave dynamics and seasonal cycles warrants caution.

Conclusion

The SPX's potential final 5th wave setup, combined with seasonal cycle analysis, paints a complex picture. While the index could extend its rally to 7490 by mid-2026, the historical precedent of 5th wave completions preceding bear markets cannot be ignored. Investors must balance optimism with prudence, recognizing that market cycles are as much about timing as they are about technical and fundamental analysis. As the SPX approaches its projected peak, the coming months will test whether this bull market can defy history-or if a bear market is on the horizon.