Live: Monday, May 4, 2020

11:45 a.m. New York time

What’s happening now? The S&P 500 dropped to 2771 Sunday night and reversed to the upside, bouncing off of the 78.6% Fibonacci retracement level.

What does it mean? The price will next enter a short-term upward trend, the middle movement of three.

Screen Shot 2020-05-04 at 8.38.45 AM

What does Elliott wave theory say? By my count the Minor A wave to the downside is complete, having shows five sort-of-unclear waves (I really find Minor A hard to count). Minor A is a subwave of Intermediate B to the downside within Primary 2 to the upside, all within Cycle 1, a major downtrend that began on February 19.

B waves tends to correct anywhere from 38% to 79% of wave A, so we can place a tentative target between 2850 and 2925, give or take.

What is the alternative? The alternative posits that Minor wave B is still not complete. If it moves below a 90% retracement of wave A (2742 on the S&P 500), then it is a Flat rather than a Zigzag.)

What about my trades? The clock is running out on my three short bear call options spread positions on SPY: Lots 12, 13 and 14. They all expire May 15. If SPY reaches below 261, then all will be out of the money and will expire for maximum profit (or be sold for a profit). Anything below 263 makes one position profitable. (The lot numbers link to the entry analyses.)

I one had a lawyer who’s favorite line was “It is what it is.” That sentiment seems to apply here.

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.

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 4, 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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