Tuesday, February 23, 2021

3:40 p.m. New York time

I’ve posted an analysis of Bitcoin futures.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 reached a low of 3904.75, the end of wave 3 of Bitsy degree, and bounced in a wave 4 correction to the upside. Following wave 4 it will decline below 3904.05 in a 5th wave. I’ve updated the chart.

10:55 a.m. New York time

New analysis. I’ve posted an analysis of Tesla (TSLA).

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to fall in overnight trading, reaching a low of 3840 in the middle portion of the decline that began on February 15 from 3959.25, and at a smaller level, the middle portion of the decline that began on February 19 from 3931.

What does it mean? What we’ve seen since mid-February are the early steps in what will develop into a significant decline of 1,000 points and more.

What are the alternatives? The alternative is that the rise that ended on February 15 isn’t over, and the price will reverse and set a new high. The lower the price goes, the less likely is the alternative.

[S&P 500 E-mini futures at 3:30 p.m., 25-minute bars, with volume]

What does Elliott wave theory say? The present decline is wave 3 of Bitsy degree within wave 3 of Subminuscule degree within wave 1 of Minuscule degree, the smallest of a series of 1st waves of increasingly larger degree, up to wave 1 of Minuette degree, and above that, wave A of Minute degree within wave 4 of Minor degree. At the Bitsy degree, it’s possible that the morning bump to the upside is the beginning of Bitsy wave 4, or it could be wave 2 correction within Bitsy 3. Time will clarify the chart.

Minor wave 4 is part of an expanding Diagonal Triangle that began December 26, 2018 and will eventually reach the lower boundary of that triangle, presently in the low 2000s.

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 23, 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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Based on a work at www.timbovee.com.