Live: Friday, May 8, 2020

10:50 a.m. New York time

What’s happening now? The S&P 500 retraced 78% of its decline from April 30, reaching 2923, and then withdrew slightly.

What does it mean? The 78.5% retracement is a Fibonacci level, a not uncommon stopping point. However, that’s no guarantee that the price won’t rise more, even beyond 2965, the beginning of the decline from April 30.

Screen Shot 2020-05-08 at 7.48.12 AM

What does Elliott wave theory say? The present A-B-C pattern at the Intermediate degree, the second within a complex 2nd wave of Primary degree, is like the pattern before it a Zigzag, with five subwaves within the A wave, three within the B, and five within the C. From an Elliott standpoint, C has completed its pattern and the only question remaining is how high Minor wave 5 within Intermediate C will go.

What is the alternative? The alternative count has the decline from April 30 as Intermediate wave 1 within Primary wave 3 to the downside, with the present rise as Intermediate wave 2 to the upside. The count would be the same in either case.

The matter will be resolved if the price moves above the April 30 high of 2965, the start of wave 1 under the alternative count. A 2nd wave never moves beyond the start wave wave 1, so if it does slip higher than 2965, the preferred count is correct, buttressed by the fact that a wave C in a Zigzag almost always ends beyond the end of wave A.

If the price declines, then we’ll have to wait for closure of this knotty problem.

What about my trades? Seven days until my three short bear call options spread positions on SPY expire, next Friday. The lots with links to the entry analyses are Lots 12, 13 and 14.

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 8, 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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