Wednesday, November 4, 2020

3:20 p.m. New York time

As it turned out, the X-wave alternative proved to be the S&P 500’s pattern. I’ve updated the count, showing today’s rise being an A wave of Minuette degree within a second corrective pattern connected to the first corrective pattern by the overnight decline (X wave of Minuette degree). All of this is happening with a 4th wave of Minute degree.

9:40 a.m. New York time

The futures markets on the major indexes had a dramatic night that commentators excitedly credited to the vast uncertainties in the American presidential election vote count. Elliott wave analysts, on the other hand, calmly marked up their charts, concluding that the drama was nothing more than typical 5th wave triangle pattern, setting up a resumption of the decline that began in February.

What’s happening now? The S&P 500 E-mini futures beginning at 9:30 p.m. underwent a rapid swing that in a couple of hours covered about 100 points each way.

What does it mean? The pattern is typical of the concluding movement in the direction of a larger movement. The swing occurred in an upward movement within an upward correction.

What is the alternative? On the chart I marked last night’s high as the end of the pattern. It’s possible to count the pattern so that an additional high will in fact be the end.

[S&P 500 E-mini futures, 5-minute bars]

What does Elliott wave theory say? The horizontal triangle, marked in red, is the 5th wave of Subminuette degree within the C wave of Minuette degree, both within and marking the end of the 4th wave correction of Minute degree. The ensuing decline will either be the 5th and final wave, of Minute degree, within the declining 3rd wave of Minor degree. Or it could be an X wave of Minute degree, a boundary between two corrective pattern within a compound structure.

My trading strategy. I’m staying away from any new options position until I understand the present decline: Minute 5 is a trade; Minute X is a warning to stay away.

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, November 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.

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