3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has risen slightly above the morning high, to 3934 on the E-mini futures, 3919.54 on the index. It is unclear whether that level marks the end of wave 4 of Subminuscule degree. I’ve updated the chart.

9:55 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise overnight, completing an upward correction within a larger downtrend.

What does it mean? The correction will be followed by a resumption of the downtrend as the prices drops below yesterday’s low, 3843.25.

What are the alternatives? The upward correction has the potential of extending in a net sideways movement before it is complete.

What does Elliott wave theory say? The upward correction, wave 4 of Subminuscule degree, appears to have within it three waves, meaning it has satisfied the rules of Elliott wave theory. The declining middle wave within Subminuscule 4 — a B wave — is quite small compared to the rising waves that surround it, so it is impossible that the rise we’ve seen since yesterday was in fact only the A wave of Bitsy degree. A decline of the price below the start of Subminuscule 4, from 3843.25, will be proof that the 4th wave is complete, eliminating the alternative analysis. A move above today’s high so far, 3921.50, will prove that Subminuscule 4 is still underway and will have at least two more waves of Bitsy degree within it before it conclues.

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.

• Elliott wave analysis
• Fibonacci level

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 26, 2021

Disclaimer

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.

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.