Live: Thursday, July 12, 2018

3:15 p.m. New York time

Why Elliott wave analysis is an art not a science.

SPY today exceeded its high of July 10, which means that the 2nd-wave countertrend correction did not in fact end on July 10, may have ended today, but maybe not. That interpretation will await further developments.

I’ve been working with Elliott wave analysis for more than 30 years, and reading the best in the game for that period of time. The shifts in interpretation that we saw today are commonplace.

Elliott wave analysis is not in any way a sure path to perfect market decisions, no more than any other way of assessing the market. What Elliott does is provide an ongoing context — a narrative — about the path the market has taken and what the next steps will be. As for the timing of those steps — it’s not always clear. Most reversals have a large degree of ambiguity that will be resolved over time.

So what I can say with certainty is that once the 2nd wave correction upside is complete, it will be followed by a 3rd wave down of the same Minute degree. Also, the count within the Minute wave suggests that it is near completion, so the reversal will come soon.

10 a.m. New York time

From Elliott wave analysis of SPY, I conclude that  the 2nd wave counter-trend correction in the Minute degree {+1} to the upside that began on June 25 ended on July 10.

The Minuette 3rd wave to the downside has begun. It is part of a 3rd wave down in the Minor {+2} degree. The movement has traced a 1st wave down in a lower degree — Subminuette {-1} or Micro {-2}.

All of this is part of the working through of a major bear market that began on Jan. 26.

I plan no trades today, but I anticipate that any trade I make for quite some time to come will be bearish in its expectations.

The SPY chart covers 20 days with one-hour bars.


By Tim Bovee, Portland, Oregon, July 12, 2018

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.


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