Live: Friday, May 29, 2020

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures retreated from yesterday’s peak of 3065.50.

What does it mean? The price is approaching another Fibonacci stopping point, a 78.6% retracement of the decline from February 19 to March 22.

Screen Shot 2020-05-29 at 6.37.44 AM

What does Elliott wave theory say? I count the most recent push upward (highlighted in yellow) as a C wave showing a clear five waves to the upside. The 5th wave internal to wave C may not yet be complete, but it is nearing its end. There are two possibilities for what happens next: Either the end of wave C marks the end of Primary wave 2’s correction of the Primary wave 1 decline that began February 19, or the C wave will be followed by a wave down, an X wave, and then a third corrective pattern in the compound correction that is Primary 2.

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Live: Thursday, May 28, 2020

10:20 a.m. New York time

What’s happening now? The S&P 500 E-mini futures resumed their rise, peaking last night at 3053.75 before withdrawing slightly.

What does it mean? The correction that began March 22 is still under way, having risen 879.50 points in 58 days.

Screen Shot 2020-05-28 at 7.19.05 AM

What does Elliott wave theory say? The S&P 500 is in the 2nd wave upward correction of Primary degree within a 1st wave downward trend of Cycle. The rise last night means that among the options proposed in yesterday’s analysis for the subwaves of Primary 2 — 3rd wave or 5th wave — the 3rd wave hypothesis won.

What is the alternative? A move above 3997.50, the beginning of Cycle wave 1, would invalidate idea that the entire decline since February 19 is the beginning of a correction at degrees greater than Cycle.

What about my trades? No options are in my account at present. I’m waiting for Primary wave 3 to begin before entering. My shares in SDS profit when the S&P 500 goes down and loses when it rises. They are presently losing but since shares have no expiration so I intend to hold them through Primary 3.

Learning and other resources. Elliott Wave International has long been the leading analytical house based on Elliott wave theory. They make available a number of free educational materials and other resources, in addition to their for-pay subscriptions.

I recommend two books, both by people associated with EWI.

First, Elliott Wave Principle by Robert Prechter and A.J. Frost is the book that, along with Prechter’s analyses, that created the revival of Elliott wave theory. I first read it in 1984, and it has had a profound influenced on my thinking about markets ever since.

Second, I’ve found Visual Guide to Elliott Wave Trading by Wayne Gorman and Jeffrey Kennedy, both of EWI, to be a useful book that relates Elliott wave theory to practical trading. The authors are hands-on Elliotticians, and for an active trader, that’s exactly what’s needed — less theory and more how-to. The first chapter of the book gives a very nice thumbnail run down of what Elliott wave theory is all about.

Terminology. Here are some links to information about some of the technical jargon I use.

Charts. On my charts, waves have a subscript showing the degree above or below the Intermediate degree. Here are the subscripts and the degree each represents:

  • {+3} Supercycle
  • {+2} Cycle
  • {+1} Primary
  • No subscript: Intermediate
  • {-1} Minor
  • {-2} Minute
  • {-3} Minuette

By Tim Bovee, Portland, Oregon, May 28, 2020

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Live: Wednesday, May 27, 2020

10:10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures peaked overnight at 3035 and then began an energetic decline.

What does it mean? It could be that 3035 marks the end of the correction that began on March 22. Maybe. There are still some ambiguities.

Screen Shot 2020-05-27 at 7.04.39 AM

What does Elliott wave theory say? The possibly final leg of Primary wave 2 to the upside appears to have met the requirements, with sufficient ambiguity for me to add a question mark. If the 3035 high indeed is the end of Primary wave 2, then the subsequent decline is the very early stage, at the Minute or perhaps Minuette degrees, of a powerful Primary 3 decline. The final Intermediate wave C of Primary wave 2 covered 131.25 points, or 4.5%.

 

 

What is the alternative? I’m uncertain whether the peak is a 3rd wave or a 5th terminus. If 5th, then the correction is likely over. If 3rd, then there’s more upside to go.

What about my trades? No options are in my account at present. My shares in SDS profit when the S&P 500 goes down and loses when it rises.

Learning and other resources. Elliott Wave International has long been the leading analytical house based on Elliott wave theory. They make available a number of free educational materials and other resources, in addition to their for-pay subscriptions.

I recommend two books, both by people associated with EWI.

First, Elliott Wave Principle by Robert Prechter and A.J. Frost is the book that, along with Prechter’s analyses, that created the revival of Elliott wave theory. I first read it in 1984, and it has had a profound influenced on my thinking about markets ever since.

Second, I’ve found Visual Guide to Elliott Wave Trading by Wayne Gorman and Jeffrey Kennedy, both of EWI, to be a useful book that relates Elliott wave theory to practical trading. The authors are hands-on Elliotticians, and for an active trader, that’s exactly what’s needed — less theory and more how-to. The first chapter of the book gives a very nice thumbnail run down of what Elliott wave theory is all about.

Terminology. Here are some links to information about some of the technical jargon I use.

Charts. On my charts, waves have a subscript showing the degree above or below the Intermediate degree. Here are the subscripts and the degree each represents:

  • {+3} Supercycle
  • {+2} Cycle
  • {+1} Primary
  • No subscript: Intermediate
  • {-1} Minor
  • {-2} Minute
  • {-3} Minuette

By Tim Bovee, Portland, Oregon, May 27, 2020

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Live: Tuesday, May 26, 2020

9:50 a.m. New York time

What’s happening now? The E-mini S&P 500 futures continued their rise as the end of the upward correction that began March 22 mounts a final push before it reaches its end.

What does it mean? The upward correction will be followed by a renewed decline that will carry the price down beyond 2174, most likely significantly so.

Screen Shot 2020-05-26 at 6.41.35 AM

What does Elliott wave theory say? So far the rise, Primary wave 2, has retraced a bit more than 61.8% of the decline that began on February 19, a Fibonacci level that is often the stopping point for trends, although not always. The rise reached a peak this morning, as of this writing, of 3019.75. The rise will fall short of 3397.50, the beginning of the decline.

Typically in a bear market 2nd wave the public mood reaches a point where the consensus is that the market has turned bullish.

I don’t see that happening yet. For example, the Advance/Decline line, a metric that compares advancing stocks to declining stocks. At the outset of the bear market, on February 19, the A/D line was 92,432. The low point so far was 69,753 and it presently sits at 80,870. Yes, optimism is returning, but without a lot of enthusiasm. That suggests to me that there is more upside to Primary 2 before Primary 3 comes along and dashes all bullish hopes.

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Live: Monday, May 25, 2020

9:45 a.m. New York time

What’s happening now? The U.S. stock and options markets are closed today for the Memorial Day holiday, but the S&P 500 E-mini future contracts are trading. The index continued to rise in what I expect to be the final wave up before a significant downturn. The movement began on May 22 at 2903.75 and has peaked so far today at 2986.25.

Screen Shot 2020-05-25 at 6.41.58 AM

What does it mean? The movement has more upside in its journey. The present peak is only 2.8% above its starting point, and two comparable movements within the large upward correction that began March 22 have 7.8% and 21.2%.

What does Elliott wave theory say? The present wave up is an Intermediate C wave by my count, and they tend to be energetic. The comparables in the section above were the two other C waves that we’ve seen in compound Primary wave 2 correction to the upside.

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Live: Friday, May 22, 2020

10 a.m. New York time

What’s happening now? The E-mini S&P 500 futures continue to move sideways after peaking at 2976.25 on May 19.

What does it mean? The chart suggests that the upward correction, which began March 22, is still underway but approaching an end.

What does Elliott wave theory say? The tip off is the number of subwaves in the first wave down after the May 19 peak. It’s three waves, meaning in this context that it’s an X wave (of Intermediate degree) separating the two corrective patterns that came before with a third corrective pattern that will finally put an end to wave 2 of Primary degree. The X wave is followed by a three-wave pattern, an A wave, another sign that the correction lives on.

Screen Shot 2020-05-22 at 7.01.55 AM

What is the alternative? I see no clear alternative at this point. Let’s see what happens wave C by my count.

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Live: Thursday, May 21, 2020

11:35 a.m. New York time

What’s happening now? I will confess, the little sideways track of the E-mini S&P 500 futures, looking like a snail’s trail, has left me in analytical uncertainty. So let’s pull back to what we do know. The S&P 500 has one more push to the upside before the correction has run its course.

What does it mean? The unknown is the form the rest of the correction will take. It has already stretched out over time, and the upward push could be followed by more of the correction, or a significant decline that will drop below the starting point of the correction, 2174, on March 22. In any case, the price will remain below 3997.50, the level that saw the beginning of the crash on February 19.

Screen Shot 2020-05-21 at 8.28.00 AM

What does Elliott wave theory say? The present correction is wave 2 of Primary degree and, unusually for a 2nd wave, it has traced a combination, composed of a Zigzag followed by a Flat. Completion of the present wave C of Intermediate degree will either mark the end of Primary 2, which means the start of Primary 3 and powerful decline, or extend the correction with yet another corrective pattern, which means more upside. Can’t say which at this point.

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Live: Wednesday, May 20, 2020

10 a.m. New York time

What’s happening now? My focus today is be on the rise of the S&P 500 from May 14 that may have ended on May 19. For a broader view, see Tuesday’s Live post.

What does it mean? The internal count of the rise from May 14 shows that it has traced the minimum steps required for me to declare it complete. That assessment will stand as long as the price remains below the May 19 high, 2976.25.

Screen Shot 2020-05-20 at 6.34.22 AM

What does Elliott wave theory say? The rise from May 14 to May 19 is a C wave of Intermediate degree, with five subwaves, suggesting that the next move will be down.

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Live: Tuesday, May 19, 2020

10:40 a.m. New York time

What’s happening now? The S&P 500 overnight reached a new high, 2976.25, in its correction of the decline that began February 19, pushing 12 points above the prior high, set on April 30, at 2965. The index has so far retraced the decline from February 19 to just beyond the Fibonacci 38.2% level.

Screen Shot 2020-05-19 at 7.37.28 AM

What does it mean? The movement demands a revision of my analysis of the chart. I had concluded the correction was over and a new downward movement had begun. As it turns out, that’s no longer tenable.

What does Elliott wave theory say? The prior count had the Primary wave 2 upward correction ending and Primary 3 to the downside beginning on April 30. Wave 2 exceeding that point changes the analysis.

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Live: Monday, May 18, 2020

1:20 p.m. New York time

Looking forward. My next options vehicle will be the monthlies expiring July 17. The entry date, 45 days prior to expiration, is June 2. In line with my decision to space entries within a two-week period centered on that date, I’ll be looking to open new positions between May 26 and June 9. The JUL20 series has a management date, 21 days prior to expiration, on June 26. That’s the day that I exit all profitable positions.

Buying in will require a clear decline into the early stages of the S&P 500 into Intermediate wave 1. At present, there is no clarity. I shall wait until Tuesday before doing an analysis, but suffice it to say that today’s price rise, peaking at 2952.75 so far, strongly suggests at Minor wave 4 within Intermediate 1 is still underway, which was my alternative reading of the chart.

9:40 a.m. New York time

Two Futures.¬†Before looking at today’s chart, I’d like to take a step back to put our present decline in context.

Screen Shot 2020-05-18 at 6.10.28 AM

The furthest back I can go with my charting of the market blue chips is the Dow Jones Industrial average back 118 years, to 1902. The chart uses quarterly bars.

Two takeaways:

  1. No other market crash comes close to equalling the Crash of ’29, which announced the start of the Great Depression and hit bottom in 1932. Remember the crash of 1987? When the Dow went down 25% one day? Chickenfeed. Even our present Coronavirus Crash is fairly insignificant in comparison.
  2. On the chart, we’ve been in a bull market since 1932. The market fluctuates, but the trend has been up. In terms of Elliott wave theory, I can count five waves up: wave 1 from 1932 to 1937; wave 2, 1937 to 1942; wave 3, 1942 to 1966; wave 4, 1966 to 1974; and an extended wave 5 from 1974 to the present.

So two futures: If the Coronavirus Crash signals the end of wave 5, then our present decline will correct the rise from 1932. That’s a very large decline. Or, if our present crash turns out to be a lower level correction within an ongoing wave 5, then the bull market will return, tentatively at first, and then with a great deal of energy.

It will be quite some time before anyone can say with confidence which of those two futures we’ll experience.

What’s happening now?¬†A short term correction continues on the S&P 500 chart, for a second breaking above the channel of the decline that began February 19.

Screen Shot 2020-05-18 at 6.33.19 AM

What does it mean? Bear markets have their downs and ups, and we are presently in one of the ups. My trading tends to rely on movements of larger scale. The present upward correction will be followed by a powerful downtrend.

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