Tuesday, March 9, 2021

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to rise during the trading session, reaching a high on the futures of 3901.25 with half an hour to go. The price has moved above yesterday’s high, and so the alternative analysis prevails and the correction, presently wave C of Bitsy degree within wave 4 of Subminuscule degree, is still underway. I’ve updated the chart.

10:40 a.m. New York time

Trade updated. I’ve updated the NIO analysis with a chart and a discussion of decision to enter the trade.

10:30 a.m. New York time

Trade posted. I’ve entered a short iron condor options spread on NIO and have posted the analysis.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures, having fallen yesterday below the upper boundary of the channel, reversed overnight and recrossed to above the trend, although remaining below yesterday’s high of 3878.75.

What does it mean? Yesterday’s high marks the end of the low-degree upward correction that began on March 4 from 3720.50. A move below the end of the last downtrending wave, 3720.50, confirms the analysis. The downtrending wave may move below 3700, perhaps significantly so.

What are the alternatives? If the price moves above yesterday’s high, 3878.75, then the primary analysis is invalidated and the upward correction is still underway. The decline and rise from yesterday could be a continuation of the final wave of the corrective pattern, a Flat, or a separator wave between two corrective patterns, a compound structure.

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

What does Elliott wave theory say? By the primary count, yesterday’s high was the completion of wave 4 of Subminuscule degree. The decline that followed was wave 1 of Bitsy degree within downtrending wave 5 of Subminuscule degree, and the rise is wave 2, an upward correction of Bitsy degree. By the alternative count, yesterday’s high was either wave 2 within wave C of Bitsy degree, or an X wave separating two patterns in a compound structure.

My trades. Yesterday I attempted to enter a short iron condor position on NIO, and couldn’t get a fill at a price I liked. I’m trying again today.

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
  • {-8} Subminuscule
  • {-9} Bitsy
  • {-10} Subbitsy

By Tim Bovee, Portland, Oregon, March 9, 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.

Creative Commons 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.