Wednesday, September 23, 2020

9:55 a.m. New York time

What’s happening now? The S&P 500 index continues to work its way through an upward correction of the principle downtrend. So far the price has retraced almost 50% of the 199.82 point decline from September 16 to September 22.

What does it mean? The shallowness of the correction so far suggests a greater likelihood that it will be a sideways movement rather than a strong push toward the September 16 high.

[S&P 500 index, 5-minute bars]

What does Elliott wave theory say? The Subminuette 4th wave correction that began September 21 appear to be taking the form of a Flat, a form of correction that is shallower than the Zigzag seen in Subminuette 2. A 4th wave often ends within the 4th wave of Minor degree within the preceding 3rd wave of Subminuette degree — subwave 4 of 3. That subwave began and ended on September 18, with the price starting at 3,292.40 and ending at 3,327.30. The Subminuette 4th wave correction has so far reached a high of 3,321.85, which is within subwave 4 of 3, and if this correction behaves typically, it won’t rise above 3,327.30.

My trading strategy. My short iron condor options on SPY are at 28.2% of maximum potential profit, and if the position remains profitable, I shall exit on Friday, 21 days before expiration. I continue to hold my shares in SDS, the inverse S&P 500 fund.

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, September 23, 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.

Creative Commons License

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