Live: Tuesday, June 23, 2020

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures have been tracing a sideways course since June 16.

What does it mean? The chart has become ambiguous. Either the upward correction is still underway or the next downward move has begun. If the index is still correcting, then it will stay below 3231.25. If the decline has begun, then it will  pick up momentum as it falls, eventually, by 1,000 points or more.

Screen Shot 2020-06-23 at 6.31.59 AM
S&P 500 E-mini futures, 4-hour bars

What does Elliott wave theory say? On the chart I have wave 2 of Intermediate degree ending on June 16 at 3156.25. That analysis means that Intermediate wave 2 lasted one day, which is quite short for that degree. If wave 2 is still underway, then it is in its 8th day, which seems about right for Intermediate degree.

 

What is the alternative? The beginning of Intermediate 3 has yet to be confirmed by a drop below the end of Intermediate wave 1, at 2923.75 on June 15. Absent a move below that level, it remains possible — probable? — that Intermediate wave 2 is still underway.

What about my trades? I intend to enter a bear call spread position on SPY when I gain some clarity regarding the start of Intermediate wave 3. I shall continue to hold my shares of SDS, which rise when the S&P 500 falls.

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

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
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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.

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