Is the Charging Bull Getting Tired?

The 2022-23 SPDR S&P 500 ETF (SPY) Accumulation Point & Figure Count Objective has been fulfilled.

Deep pessimism pervaded the stock markets at the time we published the original S&P 500 Accumulation Case Study in early 2023. Now that price objectives are being fulfilled at much higher prices, an optimistic glow by investors surrounds the stock indexes. Lofty price objective targets are now being reached after two years of steady price uptrends.

Could fulfillment of the PnF targets signal the conclusion of the bull market that has been in force since 2023? What market actions could stop the bull run? And is it possible that higher prices are still possible now or in the future?

Let's explore these questions.

S&P 500 ETF (SPY) PnF Case Study 2020-25

An Accumulation formation (yellow shading) precedes the 2023-25 bull market uptrend. The count objective range extended to 592.20/625.10 from the Accumulation count line of 368.48. Pessimism was intense in 2022-23, with elevated inflation and a severe Bear Trend in the bond markets. A common refrain at the time was ‘Don't Fight the Fed.'

Today, optimism is as intense as pessimism was in early 2023, as the Bull Trend was getting underway. And to this day, the stock market is still fighting the Fed.

The lower PnF Bull Market count (SPY 592.20) objective was achieved in December 2024. A local Distribution formed in February that preceded a sharp downtrend into the early April tariff announcements and a dramatic climactic low. The subsequent second-quarter rally has taken the stock indexes to new all-time high prices. As the third quarter begins, the SPY has fulfilled the upper PnF count objective at 625.10.

Does the fulfillment of the 2022-23 Accumulation PnF count objective mean the Bull Market is concluding? Let's consider some scenarios.

The Distribution that precedes a bear market typically has the character of sudden volatility. The 2024 fourth quarter had a Buying Climax (BC), and the February-to-April decline was severe and what a Wyckoffian would call an Automatic Reaction (AR). Volatility continued with the intense rally to minor new highs as the upper PnF objective was reached (SPY 625.10). Note the sudden Change of Character of price action after the first PnF objective was attained in the first quarter. So far, the persistent Bull Market uptrend has been replaced by a wide and volatile Range-Bound price structure. Is this Change of Character evidence of important Supply being present? Please read my Wyckoff blog post on Distribution Definitions for more information (click here).

Additional Chart Notes

As the Bull Market PnF objective was reached, supply (selling) became dominant. Currently, the SPY is Upthrusting (UT) the February high. A reversal back below this peak (605.36 on the PnF chart) would confirm that a large trading range is still in force. Volatility would likely increase with a decline below the first Quarter high.

A Range-Bound stock market does not necessarily mean Distribution is forming. Re-Accumulation is a sideways price structure in an ongoing Bull Market uptrend. Re-Accumulation allows the indexes (and stocks) the time to generate a new cause for higher prices and continuation of the prior uptrend. Re-Accumulation and Distribution have similarities in their early phases and are distinctly different in their later phases; confusing the two structures is a common and often costly mistake.

As for tactics, the upward trend continues to have momentum. A SPY print above 631.68 will put the next ‘X' in this epic upward stride. It is very common to ‘ThrowOver' an extreme PnF target when momentum is strong. An indication of a coming correction would be a PnF three-box reversal (6.58 x 3 = 19.74 SPY Points). A reversal below the January/February PnF high (BC) of 605.36 would suggest a Range-Bound structure for the index. For now, the upward trend gets the benefit of the doubt, and Wyckoffian traders would be holding their best long positions while trailing their stops to protect capital.

All the Best,

Bruce

@rdwyckoff

Update: As of the publication date of this Wyckoff Power Charting blog post, the SPY has added an additional 'X' in the 631.68 box. This is a ThrowOver of the upper price objective by one box.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Additional Readings

Re-Accumulation Review (click here to read)

Distribution Definitions (click here to read)

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