Tuesday, January 19, 2021

12:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 E-mini futures continued to rise, reaching what can be counted as a 5th and final subwave wave of wave 1 of Submicro degree. I’ve updated the chart below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued the rise that began on January 17 from 3740.50.

What does it mean? The rise is the beginning of the end of the uptrend that began in October 2020. It will be followed by a downward correction, although a shallow one, likely reaching below 3000 and perhaps into the 2700s.

What is the alternative? The rise could be separating two, back-to-back corrective patterns. If that’s the case, then rise will be followed by a second corrective pattern.

[S&P 500 E-mini futures at 3:30 p.m., 40-minute bars, with volume]

What does Elliott wave theory say? Under my principle count, the rise from January 17 is wave 1 of Submicro degree within wave 5 of Micro degree within wave 5 of Subminuette degree, all of that happening within wave 3 of Minuette degree. Submicro wave 1 appears to be in its 4th subwave.

The alternative count labels the rise from January 17 as wave X of Submicro degree, a separator wave that will be followed by a three-wave corrective pattern (A-B-C) or a five-wave Triangle structure.

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, January 19, 2021


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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