Live: Tuesday, August 4, 2020

10:10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures, in early morning trading, hit a peak of 3297.75, and then retreated, moving briefly below the upper boundary of the price channel before moving back above the boundary.

What does it mean? If the early morning high is indeed the end of the corrective rise that began July 31, then the ensuing decline will be significant enough to trade.

Screen Shot 2020-08-04 at 7.07.37 AM
S&P 500 E-mini futures, 15-minute bars

What does Elliott wave theory say? See yesterday’s live post for a description of what lies ahead. The question isn’t where are we going but when are we going to start the downhill trip to the significant lows that are our destination.

The early morning peak today by my count completes wave C of Minuette degree within wave 2 of Minor degree. I base that on an internal count of wave C, which has completed five waves to the upside. By that count, the trip has begun. We’re on our way.


What is the alternative? It’s possible to count the wave C internals as having completed three waves, which leaves two waves to the upside before the Minor 2nd wave is complete. The car is packed, but we still have a few odds and ends to take care of before we hit the road.

I think my principle count fits the chart better, but a case can be made for the alternate.

What about my trades? A persistent drop below the upper boundary of the price channel is my signal to resume trading. We’re not there yet, but soon, soon.

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, August 4, 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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