The stock market moves in cycles, and one way to analyze these movements is through Elliott Wave Theory, which identifies patterns of impulse and corrective waves. After a detailed re-evaluation, we’ve mapped out a complete market cycle consisting of five major impulse waves, followed by a significant correction, and the start of a new cycle. Here’s a clear and concise breakdown of this analysis for investors and traders.
### Major Wave 1: The Initial Surge
The first major wave began at 15,476 and unfolded in five sub-waves, driving the market upward to 31,804:
- Sub-Wave 1: 15,476 → 25,263 (+9,787 points)
- Sub-Wave 2: 25,263 → 19,563 (-5,700 points, corrective)
- Sub-Wave 3: 19,563 → 31,000 (+11,437 points)
- Sub-Wave 4: 31,000 → 24,800 (-6,200 points, corrective)
- Sub-Wave 5: 21,800 → 31,804 (+10,004 points)
This wave established the initial bullish trend, with alternating impulse (upward) and corrective (downward) sub-waves.
### Major Wave 2: A Brief Correction
After reaching 31,804, the market entered a corrective phase, dropping to 26,538 (-5,266 points). This pullback set the stage for the next major impulse.
### Major Wave 3: The Strongest Rally
The third major wave was the most powerful, climbing from 26,538 to 73,777:
- Sub-Wave 1: 26,538 → 48,969 (+22,431 points)
- Sub-Wave 2: 48,969 → 38,553 (-10,416 points, corrective)
- Sub-Wave 3: 38,553 → 69,000 (+30,447 points)
- Sub-Wave 4: 69,000 → 59,005 (-9,995 points, corrective)
- Sub-Wave 5: 59,005 → 73,777 (+14,772 points)
This wave, typically the longest in Elliott Wave Theory, showcased significant bullish momentum.
### Major Wave 4: Another Correction
Following the peak at 73,777, the market corrected to 52,550 (-21,227 points). This deeper pullback was necessary to consolidate gains before the final impulse wave.
### Major Wave 5: The Final Push
The fifth major wave propelled the market to its all-time high (ATH) of 109,588:
- Sub-Wave 1: 52,550 → 66,262 (+13,712 points)
- Sub-Wave 2: 66,262 → 58,946 (-7,316 points, corrective)
- Sub-Wave 3: 58,946 → 108,353 (+49,407 points)
- Sub-Wave 4: 108,353 → 89,256 (-19,097 points, corrective)
- Sub-Wave 5: 89,256 → 109,588 (+20,332 points)
This wave completed the five-wave impulse cycle, marking the peak of the bullish trend.
### Major Correction: Resetting the Trend
After hitting 109,588, the market underwent a significant correction, dropping to 74,508 (-35,080 points). This sharp decline neutralized overbought conditions and tidied up the trend, concluding one full Elliott Wave cycle.
### The New Cycle: Where Are We Now?
With the previous cycle complete, the market has entered a new cycle. The first wave of this new cycle began at 74,508 and climbed to 111,980, as outlined in the pinned post. Currently, the market is in the second corrective wave of this new cycle, pulling back to consolidate recent gains.
### What This Means for Investors
This analysis suggests the market has completed a full Elliott Wave cycle (five impulse waves followed by a major correction) and is now in the early stages of a new cycle. The current corrective phase could present opportunities for investors to position themselves for the next impulse wave. However, timing and market conditions are critical, so staying informed and cautious is key.
By understanding these wave patterns, investors can better anticipate market movements and make informed decisions. Keep an eye on price action and external factors to navigate this new cycle effectively.
