Live: Thursday, April 16, 2020

10:55 a.m. New York time

What’s happening now? The S&P 500 is in an upward correction of a larger downtrend. The correction appears to be taking a zigzag pattern — up, down, up more — and to be in the middle part of the pattern.

What does it mean? Corrections are a normal part of any trend, as the number of bids and asks varies over time. This counter-trend upward correction doesn’t change my assessment that the market remains in the downtrend that began February 19.

What does Elliott wave theory say? The S&P 500 is in the 3rd wave of Primary degree

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as it comes off the 2nd wave peak of 2846 attained April 14. It ended a 1st wave at 2746 yesterday in after-hours trading, within the Primary 3rd. It was followed by the beginning of a correction, a pattern composed of three waves internally, labeled A through C. Since the larger trend is down, the A wave is an upward movement, B wave down and C wave up, the reversal of what we see in bull markets.

The S&P 500 is presently in the B wave of Minuette degree {B -2} within the 2nd wave of Minor degree (2 {-1}.

What is the alternative? The 2nd wave of Intermediate degree (2 {+1}) may in fact still be underway rather than having ended on April 14. That possibility will be eliminated if the price crosses below 2680.50, the end of the wave 1 internal to the Intermediate 2nd, since it would violate one of the rules of Elliott wave analysis.

What about my trades? As before, I’m continuing to hold my three short bear call options spreads on SPY: Lots 1213 and 14, all expiring May 15. (The lot numbers link to the entry analyses.)

By Tim Bovee, Portland, Oregon, April 16, 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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