Thursday, March 18, 2021

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 fell below 3925, invaliding this morning’s count. My new principle analysis shows wave 4 of Subminuscule degree underway, having traced a compound pattern, the second of which, C of Bitsy degree, is still in progress. Here’s a chart of the new count, and I’ve left the chart of the old count from this morning for comparison, marking it as outdated.

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

9:55 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell to within seven points of yesterday’s low of 3925. A decline below 3925 would require a re-analysis of the rise that began on March 8.

What does it mean? By my principle analysis, yesterday’s rise is the beginning of the middle wave to the upside, often the most powerful wave in the direction of the trend.

What are the alternatives? It’s possible that correction beginning March 11 is still underway. It’s also possible that yesterday’s rise completed the middle wave to the upside. See a more detailed discussion in the Elliott wave section below.

[Outdated S&P 500 E-mini futures at 9:51 a.m., 30-minute bars, with volume]

What does Elliott wave theory say? By my principle analysis, yesterday’s rise, to a high of 3978.50, was wave 1 of Subbitsy degree, the initial leg of the parent wave 3 of Bitsy degree.

Yesterday’s rise can also be counted as the completion of wave 3 of the parent Bitsy degree. However, under this scenario, wave 3 is shorter than the preceding wave 1, and that would require that the future wave 5 be really short, since under Elliott’s rules wave 3 cannot be shorter than both wave 1 and wave 5. To my mind, that makes counting the rise as one degree lower, wave 1 of Subbitsy degree, a far more likely count.

The rise I called Subbitsy 1 could also be an X wave separating corrective patterns in an ongoing correction. Sometimes corrections extend by combining two or sometimes three corrective patterns, each pattern being separated from the one before by the X wave. If the rise from today’s decline remains below 3978.50, then the X-wave scenario becomes more likely.

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 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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