Live: Tuesday, July 31, 2018

11:15 a.m. New York time

Since my very-short-term chart last week, Elliott wave analysis shows that SPY has completed wave 2 to upside of the Minute degree {+1} and is working its way through the early portion of a 3rd wave down at the same level.

It is at this microscopic level that the important waves are happening, for they determine in detail when I should add a bear positions to my options holdings in SPY.

The chart covers from July 25 to the present using 5-minute bars.

spy20180731

The count shows completion of a 1st wave to the downside at the Micro degree {-2}. A 2nd wave correction at that degree has begun, working its way through a A wave of the Submicro degree {-3} which is in a 4th wave correction at the Minuscule degree {-4}.

The next steps, once the Minuscule 4th wave is complete, will be for a 5th wave push to the upside that will complete the Submicro A wave, ushering in a B wave to the downside.

Is that the signal to enter a new SPY position? I think not. A typical 2nd wave is a zig-zag, and the C wave can be expected normally to retrace a significant amount of the preceding impulse wave, the 1st wave.

For my account, I judge the proper moment of entry to be around the end of the C wave of Submicro degree, which will in a typical zig-zag, also end the 2nd wave of Micro degree. The ensuing 3rd wave can be expected to carry well below the July 30 low, giving a position a roaring start toward profit.

By Tim Bovee, Portland, Oregon, July 31, 2018

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Live: Monday, July 30, 2018

11:15 a.m. New York time

The week opens with SPY continuing its downward course, which my Elliott wave analysis counts as wave 1 of the Minuette degree within wave 3 of the larger Minute degree {+1}

The SPY chart covers 20 days with 20-minute bars.

spy20180830

My SPY options position expires Aug. 17, which would give me an exit on Friday, Aug. 10, or perhaps Monday, Aug. 13.

With the Minute degree 3rd wave having begun, it’s also time to consider opening new positions with a later expiration.

By Tim Bovee, Portland, Oregon, July 30, 2018

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The Week Ahead: Jobs, interest rates, income, spending, global trade

cargo

It’s a two-scoop sundae week in economic reporting, with the first scoop flavored as a two-day Federal Open Market Committee meeting, ending with an announcement of changes to the Fed funds interest rate on Wednesday at 2 p.m. New York time.

The second scoop comes in the form of the monthly look at jobs, the employment situation report on Friday at 8:30 a.m. A sneak preview, the private-sector ADP employment report, will be published on Wednesday at 8:15 a.m.

Other major reports sprinkling the sundae are personal income and outlays on Tuesday and international trade on Friday, each at 8:30 a.m.

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Live: Friday, July 27, 2018

11:35 a.m. New York time

SPY continues to come down from its high of July 25. In the terminology of Elliott wave analysis,

I place the present movement as a 4th wave correction of the Micro degree {-2}, which will be followed by a final push upward, completing the C wave of  the Minuette degree that has been underway since July 3.

The next move after that completion will be a significant decline at the Minuette degree, and possibly at the Minute {+}, one degree higher.

I shall post The Week Ahead on Saturday.

By Tim Bovee, Portland, Oregon, July 27, 2018

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Live: Tuesday, July 24, 2018

11:05 a.m. New York time

This morning’s gap to the upside on SPY confirms the Elliott wave analysis in the charts posted on Monday: The 4th wave of Subminuette degree {-1} to the downside ended on July 23 and wave 5 of the same degree has begun.

When complete, it will be the end of wave C of the Minuette degree, and possibly of the wave 2 counter-trend correction to the upside at the Minute degree {+1}.

Often in 4th waves the correction will be complex, with several three-wave patterns strung together, with the occasional triangle toss into the mix. And often a simple three-wave pattern is all that occurs. There is no way to predict it.

What we do know is that the upward correction is continuing, and the challenge will be to find an exit for my options bear positions on SPY that expire in mid-August. At this degree, the Subminuette,I would expect wave 5 to be complete within a week or 10 days, setting up a 1st wave to the downside that will benefit the positions.

By Tim Bovee, Portland, Oregon, July 24, 2018

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Live: Monday, July 23, 2018

11:30 a.m. New York time

I have spoken of the difficulty, the ambiguities, that challenge the practice of Elliott wave analysis. We are now in such a time on SPY. When facing such challenges, my practice is to dive deeply into the smaller reaches of the chart.

The SPY chart below covers 15 days with 10-minute bars.

spy20180723

 

I have been counting the July 18 high as the probable completion of wave C of the Minuette degree, which has been underway since July 3, and even more significantly, of wave 2 of the Minute degree {+1}, an event that would set up a significant 3rd wave decline.

To resolve the ambiguities, I counted down to the Submicro {-3} degree. The result leads me to believe that the July 18 high was the end of the 3rds wave at the Micro degree {-2}, with the present decline being a 4th wave Micro correction, to be followed by a push above the July 18 high to complete the C wave of Minuette degree.

Now, under this count, the vertical distance and horizontal time covered by the earlier portions of wave C are small compared to the later waves within C, and that’s a bit troubling, although not unheard of.

On the other hand, if wave C were complete, then what follows would be a 1st wave to the downside within a 3rd wave resumption of the major trend. The insipid decline we’ve seen since July 18 looks far more like a 4th wave correction than a 1st wave, which argues in favor of the count I’ve presented here.

Time, as always, will put all ambiguities to rest.

By Tim Bovee, Portland, Oregon, July 23, 2018

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The Week Ahead: GDP, global trade, durables, home sales

factory

We get a first look at Gross domestic product for the 2nd quarter, April through June, on Friday at 8:30 a.m. New York time. GDP counts in the markets if there’s a surprise; usually, there’s not, but my crystal ball, like yours, shattered long ago. So as rational traders, we must take events as they unfold.

The disposition of those goods will be studied through international trade in goods, reporting how much was imported from abroad and how much exported, and by implication, how much stayed within the American economy. The global trade stats will be published on Thursday at 8:30 a.m.

Demand for those goods will also gain some insight, from the durable goods orders report, also on Thursday at 8:30 a.m.

And the always fascinating housing sector will see two major reports, existing home sales on Monday and new home sales on Wednesday, each at 10 a.m.

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