Live: Monday, April 6, 2020

3:50 p.m. New York time

A short time ago the S&P 500 broke above its March 26 high, which means my count must be revised. So it may be that the 5th wave down has not yet begun and instead the 4th wave, a combination of corrective patterns, is continuing to run its course. Or, conceivably, the 5th wave down is complete, and we are witnessing the beginning of the larger Primary degree’s 2nd degree to the upside. More tomorrow.

12:20 p.m. New York time

The S&P 500 continued its rise today. I shall hold on to my short bear call spread options positions, which expire May 15, in the expectation of a decline that will carry the index down by at least 200 points.

Based on Elliott wave analysis, I count the rise today as a 2nd wave upward correction at the Minor degree of a 5th wave downtrend of the Intermediate degree that began on March 26, at 2634.50 on the S&P 500 index futures. As of this moment the price is 2606.00, and a move above 2634.50 would invalidate my 5th wave count. Instead, I would count this rise as part of an Intermediate 4th wave to the upside, a composite structure that began March 22.

Screen Shot 2020-04-06 at 9.10.53 AM

All of this is happening within a larger 1st wave to the downside of Primary degree that began on February 19, and perhaps of higher degree waves as well. The markets’ wave structures are fractal, so that a wave of smaller degree can be correcting to the upside while its parent and grandparent degrees are moving in a downtrend.

Bottom line: The markets are a complex beast. Therein lies the fascination.

An interesting week ahead: The Federal Open Market Committee release minutes on Wednesday, a detailed glimpse at what went into their stimulus decisions in relation to the crash, and the Consumer Price Index on Friday, a look at one aspect of the impact on the economy of our coronavirus mitigations efforts.

By Tim Bovee, Portland, Oregon, April 6, 2020


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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