Wednesday, November 25, 2020

3:30 p.m. New York time

Half an hour before the closing bell, the S&P 500 E-mini futures remain above their low set in the first half hour of trading. I’ve updated the chart below.

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.

10:10 a.m. New York time

What’s happening now? The S&P 500 index and its E-mini futures completed an upward correction that began November 19 and began a decline.

What does it mean? The downward movement, when complete, will mark the end of a larger downward correction.

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

What does Elliott wave theory say? Minute wave 4 ended on Tuesday at 3655 on the futures — 3642.31 on the index — and began to decline as Minute wave 5. The end of Minute 5 will also mark the end of Minor wave 4, a downward correction that began November 9 from 3668 on the futures, or 3645.99 on the index. Minor 4 is the penultimate subwave of Intermediate wave 5 to the upside.

My trading strategy. I’m playing the Minor degree for options, so I need to see Minor for reach its end before entering a position. I’m playing the Primary degree — two degrees up from Minor — and am continuing to hold my positions.

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 25, 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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