Live: Monday, April 13, 2020

10:30 a.m. New York time

What’s happening now? The S&P 500 in trading before the opening bell last night dropped by a bit more than 100 points within a 5-minute span, and since then has been meandering sideways.

What does it mean? The upward correction has not yet run its course. My target for its highest mark remains in the 2900s, with 2930 more or less being the most likely end point. But that’s an informed guess, not an analytical necessity.

What does Elliott wave theory say? When the S&P 500 price spiked overnight I was ready to mark that peak as the end of the Minute 5th wave within the Minor 5th within the Intermediate C wave within the Primary 2nd wave. The end of the Minute 5th would mean the end of the Minor, Intermediate and Primary waves as well, launching the Primary 3rds wave.

Screen Shot 2020-04-13 at 7.24.17 AM

But, after falling the price began meandering sideways, a typical pattern for a 4th wave. And the early spike was higher than where I had previously placed the Minute 3rd wave top. So I moved the top of the 3rd on my chart to the new high, and numbered the decline and meandering as a Minute 4th wave, setting up for the 5th wave up to the 2900s.

What is the alternative? There is ambiguity on this chart. If the price moves beyond the end of wave 1, at 2680.50, then I would mark last night’s high as the end of the minor 5th and the decline and meandering as the beginning of the Primary 3rd wave down. The rule in Elliott wave analysis is that a 4th wave cannot move beyond the end of the 1st wave of the same degree. If it rises from its sideways meanderings, then I would accept my count as correct.

What about my trades? I shall continue to hold on to my short bear call options spreads, waiting for the fall.

By Tim Bovee, Portland, Oregon, April 13, 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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