Live: Tuesday, July 28, 2020

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reversed their decline near the end of New York trading yesterday and rose by around 50 points before reversing back down during European trading hours.

What does it mean? The reversal to the upside lends greater credence to my primary analysis, which sees the major rise since March as still underway.

Screen Shot 2020-07-28 at 6.31.21 AM
S&P 500 E-mini futures, 1-hour bars

What does Elliott wave theory say? The downward movement is Minor wave 4, composed of three Minuette waves.. The reversal upward is Minor wave 5 within Intermediate wave C, which in turn is part of the Primary wave 2 upward correction that began on March 22. A move above 3284,50 (purple line), the peak of Minor wave 3, would confirm that the present wave is Minor 5.

The upside of Minor wave 5, now at 3223, is limited to 3397.50 (tan line). Any move above that level will force a major reworking of my analysis of everything that has happened since the crash began on February 19. The trend line shows an upside target by Aug. 3 of 3350, and that target rises the further out we go on the calendar.

What is the alternative? If I squint real hard and use my imagination I can count Minor wave 4 as having five waves, and if that’s the case then it is still possible that the 3284.50 peak is the end of Primary wave 2.

What about my trades? No new trades planned until Primary wave 2 is history.

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, July 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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