The S&P 500 has staged a very strong reversal lower, exactly after wave five reached equality with wave one near the 7,600 area. This was a key level we highlighted as a potential exhaustion point, especially as momentum indicators were already warning of weakening upside strength through a clear RSI divergence.
As we already discussed in our June 1 outlook, this scenario was flagged in advance, with emphasis on the risk of a wave five exhaustion completing near projected Fibonacci equality targets. That prior assessment aligns closely with the current price action now unfolding, as the market has indeed turned lower almost immediately after tagging the projected resistance zone.
So far, the decline has unfolded aggressively, suggesting that the market is in the middle of at least a minimum three-wave corrective pullback. If selling pressure persists, the correction could later extend toward the 7,200–7,000 support zone, which remains an important area to watch in the coming weeks.
Of course, corrective rallies can still occur during the broader decline, and the first rebound may not be far away. The market could find temporary support around the 7,350–7,280 region, which is now coming into focus as a potential short-term reaction zone. However, any recovery from those levels should be viewed as corrective in nature while the larger pullback structure remains in progress.
For now, the completion of wave five near our projected target and the subsequent sharp reversal continue to support the view that a larger corrective phase is underway.
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