Tuesday, November 24, 2020

1 p.m. New York time

Although the Dow Jones Industrial average moved above its high of November 9, the end of Minor wave 3 to the upside, neither the S&P 500 nor the index-based E-mini futures have exceeded that level. I’ve updated the E-mini futures chart below.

9:45 a.m. New York time

Holiday schedule. Thursday is a holiday in the United States and the stock exchanges will be closed. The closing bell will ring three hours early on Friday, at 1 p.m. New York time.

What’s happening now? The S&P 500 E-mini futures rose slightly overnight, continuing the upward correction that began November 19.

What does it mean? The upward correction will most likely stay below the upper boundary (red line on the chart) of the expanding Diagonal Triangle that began in December 2018. Presently the boundary is at 3674 plus change.

[S&P 500 E-mini futures, hourly bars, with volume]

What does Elliott wave theory say? The upward correction is wave 4 of minute degree within downtrending wave 4 of Minute degree, which began November 9. One degree higher is wave 5 of Intermediate degree, which began December 26, 2018.

My trading strategy. I’m reluctant to enter new options positions during the holiday week, since traders taking time off results in lower liquidity and in turn means a higher likelihood of surprises. So I’ll turn to analyzing new positions on Monday. I’ll continue to hold my shares in the bearish exchange-traded fund SDS.

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 24, 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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Based on a work at www.timbovee.com.