Thursday, November 26, 2020

2 p.m. New York time

What’s happening now? U.S. stock and bond markets are closed for the Thanksgiving Day holiday. During a shortened trading day, ending at 1 p.m. New York time, the S&P 500 E-mini futures fell to a new low since the November 24 peak.

What does it mean? The new low increases the likelihood that a significant descent is now underway.

What is the alternative? It’s possible that the upward correction that began November 19 is still underway.

[S&P 500 E-mini futures, 30-minute bars, with volume]

What does Elliott wave theory say? The likelihood is that Minute wave 5 of Minute degree is underway, possibly the final wave of Minor wave 4 to the downside, although 4th waves have a tendency to extend.s

My trading strategy. At present, staying out of options and holding on to my bear-oriented shares in 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 26, 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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