10 a.m. New York time

What’s happening now? Early this morning, before the opening bell, the S&P 500 E-mini futures exceeded its high of March 28 by 10 points, reaching 3075.50 before retreating a little.

What does it mean? The analysis is unchanged from yesterday. The final upward push of a correction to the decline that began February 19 is underway and nearing its end, or perhaps has already ended. I’ve drawn the channel on the chart based on the assumption that 3075.50 is the correction peak, but that’s not necessarily the case. It’s a what-if framing, not a certainty.

What does Elliott wave theory say? By my count the final wave up of the correction, Intermediate wave C within Primary wave 2 within Cycle wave 1, began on May 14 and has covered 315.25 points, a rise of 11.4%. It has covered sufficient ground to be considered complete. When Primary 2 is done, it will be followed by a very significant decline, Primary wave 3.

 

 

 

What is the alternative? The correction is a combination, with two corrective patterns yoked together, and it’s still a possibility that a third pattern will be added, extending the correction even further.

What about my trades? No options are in my account at present. I’m waiting for a signal that Primary wave 3 has begun. 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.

• Elliott wave analysis
• Fibonacci level

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, June 2, 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

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.