Live: Wednesday, June 17, 2020

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continue to trace out a decline from the June 8 peak of 3231.25. At present it is undergoing a small correction to the upside that has a high likelihood of remaining below 3250.

What does it mean? The price is near the top of the channel. When the decline resumes, the price will drop, fairly rapidly I would think, down to the channel’s lower bound in the low 2100s.

Screen Shot 2020-06-17 at 6.31.21 AM
S&P 500 E-mini futures, 4-hour bars

What does Elliott wave theory say? The correction is Minor wave 2 to the upside within Intermediate wave 1 to the downside within Primary wave 3 to the downside within Cycle wave 1 to the downside. Within Minor 2, I think Minute wave A to the upside is complete and the price is beginning Minute B, a small downward correction.



What is the alternative? Primary wave 2 could still be underway, although it’s potential for a further rise is seriously constrained: It cannot move above the February 19 high, 3397.50, without forcing a re-analysis of everything that has happened in the market since then.

What about my trades? Unchanged. I’m foreswearing options until Intermediate wave 3 begins, and I’m holding on to my SDS shares in anticipation of continued decline.

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, June 11, 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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