S&P 500 Market Outlook: Navigating the Path to a Bullish Breakout by June 2025
At Vital Direction, we are committed to delivering precise and forward-looking market analysis rooted in deep technical expertise. Our current evaluation of the S&P 500 indicates that the recent upward movement is not the beginning of a true bull market. Rather, it reflects a counter-trend rally that is approaching exhaustion. We firmly believe that the market is preparing for a significant decline in the short term, followed by a prolonged sideways consolidation, before initiating a genuine, powerful bull market in late June 2025.
Elliott Wave Analysis: A Classic Counter-Trend Structure
Our Elliott Wave analysis suggests that the S&P 500’s recent rally has been corrective in nature, comprised of only three waves — a classic hallmark of a counter-trend move. This pattern lacks the five-wave impulsive structure typically associated with sustainable bull markets. From our vantage point, this confirms that we remain in a larger corrective phase.
We anticipate that a sharp retracement is imminent, one that may unfold over the coming days and weeks, ultimately transitioning into a period of sideways price action until mid-to-late June 2025. Only thereafter do we foresee the conditions forming for a new all-time high and the emergence of a powerful bull leg.
Gann Theory Timing: Imminent Market Top
Our Gann timing model aligns precisely with this forecast. We have identified this week as a critical timing window for a potential top in the S&P 500. Once this pivot is confirmed, we expect the index to enter a steep downward phase. From a Gann perspective, this is a natural part of the market’s cyclical structure — a necessary clearing phase before the next long-term advance.
US Bond Yields: A Telling Risk-Off Signal
One of the most overlooked — yet crucial — factors supporting our bearish near-term view is the behaviour of US bond yields. Charts clearly show that bond yields are breaking out to new highs, a significant development that suggests institutional and “smart money” investors are positioning defensively. This is not a characteristic of a “risk-on” environment.
When yields rise, particularly amidst equity euphoria, it typically indicates that investors are seeking safety and yield rather than embracing equity risk. This divergence is a red flag that supports our conviction: the equity rally is unsustainable, and a meaningful correction is near.
Seasonality Supports the Retracement View
Historical seasonality trends for the S&P 500 further validate our analysis. Data indicates the following typical market behaviour:
- Mid-May to Late May: Downtrend
- Late May to Mid-June: Temporary uptrend
- Mid-June to Late June: Another corrective phase
- From Late June Onward: Start of the next major bullish cycle
This seasonal rhythm perfectly mirrors what we see technically: the market is preparing to reset before beginning a strong ascent in July 2025, building into a full-fledged bull market by late June.
The Broader Picture: Beyond US-China
While some market optimism has emerged on the back of renewed US-China tariff discussions, we caution against over-reliance on this narrative. The market appears to be ignoring the broader geopolitical context, including the absence of any clear tariff agreements between the US and Japan — another major global economic player.
The complexity of global trade negotiations introduces substantial uncertainty, which may continue to weigh on investor confidence. Until such macroeconomic factors are stabilised and digested by the market, we do not anticipate a truly risk-on environment.
The Road Ahead: A Strategic Pause Before Ascent
In conclusion, Vital Direction maintains its firm stance: the current market structure does not yet support the onset of a sustained bull market. A meaningful retracement is necessary and, indeed, healthy for the long-term health of the market. We expect this corrective period to unfold over the coming weeks and months, culminating in a sideways consolidation until late June 2025 — the point at which we foresee the S&P 500 transitioning into a highly bullish environment, with the potential to reach new all-time highs.
We will continue to monitor the technicals, macroeconomic developments, and global capital flows to provide our clients with the most accurate and actionable insights. The bull is coming — just not yet.
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