Monday, March 15, 2021

4:10 p.m. New York time

After the closing bell. The S&P 500 — index and futures — rose above the high of March 11, confirming my principle analysis that wave 5 of Subminuscule degree has begun. The 5th wave has so far reached 3960.25 on the futures and 3970.08 on the index. In the futures chart below I’ve updated the wave numbering to reflect the resumption of the upward trend post-correction.

[S&P 500 E-mini futures at 4:06 p.m., 20-minute bars, with volume]

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500’s shallow correction continues. Looking ahead, I expect another slight decline to wrap up wave C of Bitsy degree, and then, under the principle analysis, a rise above the March 11 high of 3958.50 (the end of Subminuscule wave 3), or under the alternative analysis, a separator X wave up into the 3940s, followed by another corrective pattern. I’ve updated the chart.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures have continued their shallow downward correction since trading resumed Sunday evening and have entered the third leg of a three-wave pattern.

What does it mean? The end of the third wave often marks the end of the correction and the resumption of a rise to new highs.

What are the alternatives? Corrections sometimes have more than one three-wave corrective pattern, a compound structure. If that’s the case with this correction, expect the end of the final wave to be followed by a rising separator wave, followed by a second corrective pattern.

[S&P 500 E-mini futures at 3:30 p.m., 20-minute bars, with volume.]

What does Elliott wave theory say? The correction is wave 4 of Subminuscule degree within — several degrees higher — wave 3 of Micro degree. Within Subminuscule 4, the price has entered wave C of Bitsy degree. Under my principle analysis, the end of Bitsy wave C will also be the end of the Subminuscule 4 correction and will be followed by the rising wave 5 of Subminuscule degree. If the correction turns out to be a compound structure, the rising separator will be an X wave of Bitsy degree.

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 15, 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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