Can SPY Reach 800? The Bond Market Holds the Key| Elliott Wave S&P500 VIX Technical Analysis
Rob Roy presents an Elliott Wave analysis of the S&P 500, examining whether SPY can reach 800. He concludes that the bond market's behavior is critical to this target, as rising yields and falling bond prices are currently limiting equity upside despite a weaker-than-expected jobs report.
Summary
Rob Roy delivers a comprehensive technical analysis of US markets with a focus on whether the S&P 500 (SPY) can reach the 800 level. He notes that SPY is trading within a small descending triangle (20-point range from 760-780) and discusses multiple Elliott Wave models that have predicted the 800 target since December 2025 forecasts. However, he emphasizes that the bond market holds the key to this outcome.
Regarding bonds, Roy explains that despite a weaker-than-expected nonfarm payroll report (only 29,000 jobs added) and a slight uptick in unemployment, long-term bond prices (TLT) initially rallied but then reversed, closing lower than the previous day. This disappointing reversal meant that interest rates and yields rose, contrary to expectations that a weak employment report would reduce Fed rate-hike pressure. The short end of the curve (SHY) showed similar weakness after an initial morning bounce. Roy notes that consolidation continues at the 5.2% level on TNX and that the market remains in oversold conditions but is overcorrecting.
On the macroeconomic front, Roy reviews Fed liquidity withdrawal, noting that significant liquidity has been removed recently and continues to be withdrawn. He expresses concern about this trend and suggests the Fed may need to reverse course to support market conditions. Financial conditions remain tight, largely due to elevated oil, rates, and dollar strength. Roy also highlights the strong dollar breakout from an ascending triangle, which could pressure corporate earnings forecasts if it persists.
Roy examines several asset classes: Oil (USO) has declined modestly with some positive developments from Saudi Arabia, though the market is testing the 38.2% Fibonacci correction level near the 50-day moving average. Natural gas (UNG) broke out of a symmetrical triangle and quickly retraced to the apex, showing the classic pattern Roy has discussed. Precious metals (GLD and SLV) are struggling due to the lack of what Roy calls the "three-legged stool" (inflation expectations declining, rates falling, and Fed liquidity injection). GLD is attempting to hold 375, while SLV has broken below its symmetrical triangle and is testing the 55 level with potential for a move to 50. Cryptocurrencies (BITB and ETHW) ended well below their highs despite breaking key resistance levels, with consolidation expected below critical support levels.
For major indices: The Dow (DIA) is holding at the 50% correction level. The equal-weight S&P 500 (RSP) shows a much weaker picture than cap-weighted SPY, with a 61.8% correction currently in play. The Nasdaq-100 (QQs) recently broke through 750 after spending time in a channel, and Roy suggests a real move could develop if this level holds. Small-cap (IWM) received initial support from lower rates but is approaching strong support and may be vulnerable if rates continue rising.
Roy analyzes individual stocks: Tesla held 350 after news of better-than-expected delivery volumes, with 375 as the key breakout level. Nvidia had a strong day with a clear breakout above May resistance, potentially targeting 245. Amazon is consolidating at 250 with resistance at 260 and 270, leaving limited room for sustained moves. Micron is in a narrow channel between 1050 and 1100. Nike had a poor earnings report, citing inventory issues until 2028, creating a descending triangle pattern. Apple successfully tested its 100% fifth-wave extension level and is attempting to overcome 345 resistance. Netflix is approaching its third-wave low near 65, which Roy sees as a potential entry point. SMH (semiconductors) had a minor gap up but faces headwinds without bond market support.
Roy concludes by emphasizing that without a bond market rally to bring rates down, the path to 800 on SPY becomes significantly more difficult, though stabilization of rates could at least allow equity consolidation and potential recovery moves.
Key Insights
- Rob Roy argues that despite a weaker-than-expected nonfarm payroll report (29,000 jobs, unemployment up), bond prices initially rallied but then reversed to close lower, with yields rising more than expected. He contends this disappointed bond market reaction undermines the catalyst for equities to reach the 800 SPY target.
- Roy identifies the 'three-legged stool' of inflation expectations declining, interest rates falling, and Fed liquidity injection as all three necessary conditions for sustained precious metals rallies, noting that without these factors, metals like GLD and SLV lack fundamental support despite technical opportunities.
- Roy observes that the equal-weight S&P 500 (RSP) shows a significantly weaker trend than the cap-weighted SPY due to large tech stocks driving SPY's performance, indicating that underneath the index surface, broad market weakness persists at the 61.8% Fibonacci correction level.
- Roy expresses concern that the strong dollar breakthrough from an ascending triangle could pressure corporate earnings if it continues, as multinational companies will cite unfavorable exchange rates as earnings miss justifications in upcoming quarterly reports.
- Roy states that Fed Chair Powell is executing exactly what he promised—shrinking the Fed's balance sheet by withdrawing liquidity—and that a potential reversal of this liquidity withdrawal may be necessary to support market conditions and enable the path to the SPY 800 target.
Topics
Transcript
[0:05] Hello everyone, this is Rob Roy, and welcome to our Elliott Wave Analysis of the US market . As we do every week, we display on the screen the stocks that will be reviewed in this entry. Just a reminder : if you are interested in a specific promotion, you can go directly to it using the sections in this video. So, let's look at the SPY chart. As you can see, we had an update today, probably following on from yesterday. We closed below the opening price, but at least we broke away from the daily lows and got back above the 10- day moving average. If you've [0:37] been on my live streams for subscribers throughout the…
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