Thursday, February 11, 2021

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued small-degree movements during the day. This morning’s analysis stands. I’ve update the chart below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose from its February 10 low, 3878.25, and at the opening bell was trading at 3916.25, which is 12.5 points below the February 10 high, 3928.50.

What does it mean? By my principle count, the February 10 high ended the rise from January 31, and the subsequent decline and bounce are the early steps in a downtrend that will correct that rise and eventually far larger uptrends. In other words, it’s a big deal for traders.

What are the alternatives? If the price remains below 3928.50, then principle count stands. If it moves above, then the rise from the end of January is still underway and the downtrend has not yet begun.

(Another giant chart, as the WordPress editor’s resizing function fails.)

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

What does Elliott wave theory say? Under the principle count, the February 10 high completes the 5th wave of Subminuscule degree, and cascades up through the parent waves to a completion of wave 5 of Subminuette degree, wave 3 of Minuette degree, wave 5 of Minute degree and wave 3 of Minor degree. The decline that began yesterday is the beginning of wave 1 of a very small degree, the first building block of what will be a major decline.

Under the alternative count, the decline is a low-degree correction within wave 5 of Subminuscule degree as the uptrend continues.

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

By Tim Bovee, Portland, Oregon, February 11, 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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