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.

What is the alternative? Despite the other waves, there is no guarantee that the present Intermediate C wave will match them for distance. Each wave has a certain form common to others of its species, but in terms of specifics is suis generis.  Intermediate C has met its requirements of form and will end when ends at a time and place unknown.

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 25, 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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