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


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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