Live: Monday, June 29, 2020

10:10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continue a course somewhere between sideways and down.

What does it mean? When the low-degree hesitation is over, the index will start a major decline to below 2050, perhaps well below. The likely target is set by the lower boundary of the channel, which moves lower every day.

Screen Shot 2020-06-29 at 6.56.36 AM
S&P 500 E-mini futures, 4-hour bars

What does Elliott wave theory say? The low degree of hesitation is Minor wave 2, and by some counts it could already be over. Or not. When Minor wave 2 to the upside is complete, it will be followed by Minor waves 3 down, 4 up and 5 down, before the the one degree higher movement to a upside, Intermediate wave 2. That upward correction will remain below 3231.25. It will be followed by the major decline, Intermediate wave 3


What is the alternative? The main variables are questions of timing. Intermediate wave 1 is already in its 25th day, so it’s overdo for a wrap-up. All any trader can do is watch closely and hope for clarification.

What about my trades? I’m holding no options on SPY at this point. I’m waiting for Intermediate wave 3. I’m continuing to hold my shares of SDS, which will gain value as the S&P 500 Intermediate wave 3 traces its 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 26, 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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