Still Looking Higher - Market Analysis for Jan 3rd, 2022

Once we topped in wave [3] on the 5-minute the market has certainly taken its sweet time during this wave [4].  But, we are still well over support, so nothing has changed in my overall expectations, as outlined over the weekend.

So, I can keep this update quite simple.  As long as we continue to hold support, I am looking for a small 5 wave rally back towards the highs to complete wave i of [5] of [iii], as shown on the 5-minute chart. Thereafter, I expect a wave ii pullback, to be followed by a rally to new highs, which should be targeting at least the 4860SPX region.

In the meantime, I want to remind you again that the higher we go, the greater the risk that the 7-10% pullback I expect in the larger degree wave [4] takes hold.  Ideally, I still would like to see waves [iii], [iv] and [v] within wave v of 5 of [3] complete, as can be seen on the 60-minute chart, before we begin wave [4].  But, keep in mind that we now have approximately 300-350 points of downside risk, with maybe another 150 points of upside potential. And, the higher we go, clearly, the risks continue to rise.

5minSPX
5minSPX
60minSPX
60minSPX
Avi Gilburt is founder of ElliottWaveTrader.net.