SPX Elliott Wave Structure: Assessing the Post-Correction Rally's Durability

The S&P 500 closed at 6,792.62 on December 19, 2025, positioned within a new bullish sequence following the November correction. This marks a clear structural shift. The November decline formed a textbook A-B-C correction, with wave (c) ending near the 1.618 Fibonacci extension at 6693. This precise targeting confirmed the completion of wave ((ii)) and cleared the path for a fresh advance.

The subsequent rally is structured as a new bullish sequence, beginning with wave (i) and followed by a shallow pullback as wave (ii). This pattern is a classic setup for a larger third wave (wave (iii)) in Elliott Wave theory. The key support level to watch is the 6519.34 invalidation point. As long as price holds above that level, the index should continue higher, targeting a price range of 6854-6914 for wave (iii).

The bottom line is one of confirmed structure. The market has respected key Fibonacci support, validated the correction's end, and is now building the foundation for a new leg up. For now, the risk-to-reward favors the upside, with any dips expected to be corrective in nature.

The Corrective Phase: Validating the November Decline's Completion

The recent correction in the S&P 500 has now completed its complex structure, clearing the path for a potential new impulsive move. The advance to 6920.21 marked the completion of wave (3) within a larger impulsive structure, a key milestone that defined the prior uptrend. The subsequent decline was not a simple drop but a deliberate, multi-layered corrective phase, specifically a double three Elliott Wave pattern.

This structure is significant. A double three is a complex corrective formation that typically takes longer to unfold than a simple correction like a zigzag or flat. Its presence signals that the market took time to digest the prior advance, with the decline from the wave (3) high breaking down into a series of sub-waves: first a wave ((a)) down to 6814.26, then a partial recovery in wave ((b)) to 6882.32, and finally a deeper wave ((c)) to 6763.11. This was followed by a corrective rally in wave X, peaking at 6829.78, before the market turned lower again to initiate wave Y. Wave Y itself was a lower-degree zigzag, with its final leg, wave ((c)), extending down to the November low at 6630.72.

The completion of this double three pattern at the November low is the critical validation point. It has allowed the market to begin wave (5), which is the final leg of the larger corrective phase. For the correction to be considered truly complete, wave (5) must now drive the index decisively above the high of wave (3) at 6920.21. This breakout is necessary to invalidate the possibility of a double correction, where the market would have to retrace further before a new uptrend could begin.

In practice, this means the November low at 6630.72 has become a key support level. Any near-term pullback from the current rally is expected to find support within a defined swing structure, likely a 3, 7, or 11 swing sequence. The bottom line is that the market has moved from a complex, time-consuming correction into a new phase. The completion of wave (4) has set the stage for wave (5), but the rally's legitimacy hinges on a decisive break above 6920.21. Until that happens, the correction remains a work in progress.

Support, Resistance, and the Post-Correction Outlook

The S&P 500 has completed its corrective pullback, setting the stage for a renewed bullish sequence. The market's structure now points to a clear path higher, with key technical levels defining the next phase of the rally.

The immediate support is firm. The index found a base near the 1.618 Fibonacci projection around 6693, which also aligns with a critical pivot level. This area, along with the sharp correction near 6,660, forms a solid foundation. The primary support zone is the double bottom close to 6,800, providing a second line of defense. As long as price holds above the 6519.34 invalidation level, the bullish Elliott Wave structure remains intact.

The rally from the November low is now targeting a significant extension. The next major price objective lies within the 100%-161.8% Fibonacci extension area of wave (i), which projects a target zone of 6854-6914. This range represents the primary upside catalyst for the current wave ((iii)) advance.

A potential continuation pattern is forming. An Elliott wave – contracting Horizontal Triangle could be developing from the SPX 10/29/25 peak. These net sideways corrections often end with a sharp thrust in the direction of the main trend. If this pattern completes, the subsequent move is likely to exceed the SPX 10/29/25 peak, clearing a key psychological and technical hurdle.

The bottom line is a balanced but bullish outlook. The market has respected key support, completed its correction, and is now building a new advance. The path forward hinges on holding the critical 6630.72 pivot. A break below it would invalidate the current bullish sequence. For now, the risk-to-reward favors the upside, with the next major target zone clearly defined.

Risks, Catalysts, and the Path Forward

The bullish thesis for the S&P 500 rests on a clean Elliott Wave structure. The index has completed its corrective wave ((ii)) pullback, turning higher from a low near the 1.618 Fibonacci extension zone. This sets the stage for a new bullish sequence in wave ((iii)). The primary risk to this narrative is a decisive break below the 6519.34 invalidation level. Such a move would signal a failure of the corrective wave count, invalidating the current bullish setup and potentially triggering a deeper decline.

The key catalyst for the next leg higher is the potential completion of a contracting Horizontal Triangle pattern. This net sideways correction, which could have formed from the October peak, is characterized by a wave "b" that comes close to the point of origin of wave "a". The pattern is now nearing its conclusion, with daily momentum oscillators like the RSI and Stochastic showing signs of exhaustion. If this triangle finishes, it is typically followed by a thrust in the direction of the main trend. The post-triangle move would likely exceed the October peak, providing a powerful impetus for the wave ((iii)) advance.

The broader market cycle suggests a significant upside target. By combining Elliott Wave analysis with seasonal patterns and a Pi-based cycle, the projection points to a continued rally to a price range of 7120-7760 by late April 2026. This ambitious target is contingent on the successful completion of the current corrective wave and the subsequent bullish sequence. The path to these levels will not be straight, as corrections are expected to remain choppy. However, the structure supports further upside as long as price holds above the critical 6519.34 level.

The bottom line is one of defined risk and a clear catalyst. The market is positioned for a continuation of its bullish trend, but the 6519.34 level is the non-negotiable line. A break below it would reset the entire technical picture. For now, the completion of the Horizontal Triangle represents the next near-term trigger. If it plays out as expected, it could launch the index toward its late-year target, validating the broader cycle's optimistic forecast.