Friday, February 19, 2021

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 completed the first leg, wave A of Bitsy degree, of the upward correction that began on February 18 and has embarked on the second leg, wave B of Bitsy degree. I expected the second wave to end above the start of the correction, 3880.50.

I’ve posted a Bitcoin futures analysis.

10:15 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continues to rise in the first leg of a small scale upward correction within a larger downtrend that began on February 15.

What does it mean? The correction will remain below the February 15 peak of 3959.25 on the futures, 3950.43 on the index, and will be followed by further moves to the downside, of increasing significance.

What are the alternatives? If the price moves above the February 15 high, then the decline that followed is a correction within an ongoing uptrend.

[S&P 500 E-mini futures at 3:30 p.m., 15-minute bars, with volume]

What does Elliott wave theory say? Wave A of Bitsy degree has completed it’s 3rd wave internally and is correcting with wave 4. A final push upward will complete the 5th wave within Bitsy and begin declining Bitsy B, which will remain above the start of A, 3880.50 on the futures. A final wave C of Bitsy degree will push still higher while remaining below the February 15 high and will complete wave 2 of Subminuscule degree. The next move after Subminuscule 2 will be Subminuscule 3, a comparatively powerful wave at this small degree that will push below 3880.50, perhaps by quite a bit.

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 xx, 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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