4:50 p.m. New York time

The last half hour. In the last half hour of the regular trading session, the S&P 500 moved to a new high, triggering my alternate analysis. Here’s a chart showing the push up to 3869.75 on the E-mini futures, 3872.42 on the index. I’ve renumbered the waves as follows: The end of wave 4 of Submicro degree moves from January 17 to January 31, and the rise from January 31 is relabelled as wave 5 of Submicro degree, which is still in progress.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose during the regular trading session, reaching a high during the day of 3857.75 on the E-mini futures, 3684.81 on the index. The price in either case remained below the high set on January 26 of 3862.25 on the futures, 3870.90 on the index, and so I continue to count the rise from January 31 as an upward correction within downtrending wave 1 of Submicro degree. I’ve updated the chart.

10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to dawdle along the same levels as yesterday, staying between 3811 and 3841 in overnight trading.

What does it mean? Unchanged from Wednesday: The upward correction that began on January 27 has reached an end, and the next move will be an enthusiastic decline that will carry the price below 3656.

What are the alternatives? Also unchanged: A pause is a balance between buy and sell orders. If the buy side strengthens, then the correction will continue its upward course. A move above 3862.25 on the E-mini futures (3870.90 on the index) would force a re-analysis of the chart.

(The chart below shows the analysis before today’s new high triggered the alternative analysis. See the chart above for the new wave numbering.)

Also, the WordPress image resizing function is still broken, so… giant chart.)

What does Elliott wave theory say? And also unchanged: The present wave is C of Minuscule degree, the final subwave of wave 2 of Submicro degree. If the correction is indeed over, the next move will be wave 3 of Submicro degree, a declining wave in the direction of the trend. Third waves typically are the most powerful of the waves that make up a trending move.

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.

• Elliott wave analysis
• Fibonacci level

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
• {-4} Subminuette
• {-5} Micro
• {-6} Submicro
• {-7} Minuscule

By Tim Bovee, Portland, Oregon, February 4, 2021

Disclaimer

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.

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 www.timbovee.com.