Monday, April 12, 2021

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued its 5th wave rise at the Minuscule degree, the final stage of the parent wave 3 of Submicro degree. The movement confirms the principle analysis, below. I’ve updated the chart.

10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures remained below Friday’s high in overnight trading as the rise that began on March 25 continues.

What does it mean? The final wave of the low level uptrend that began late last month is in its final phase and internally, it is in the middle of that phase. It has a bit more upside to go over the next week or two. When complete, the rise will be followed by a shallow correction, and then another upward push.

What are the alternatives? It’s possible that Friday’s high, 4121.50, marks the end of the rise from March 25. I don’t think the internal wave count bears out that interpretation, but I can’t rule it out entirely.

[S&P 500 E-mini futures at 3:30 p.m., 90-minute bars, with volume]

What does Elliott wave theory say? The rise from March 25 is wave 3 of Submicro degree, and within it, wave 5 of Minuscule degree, all happening within a series of nested 3rd waves within a still larger 1st wave. The child wave, Minuscule 5, looks to be in its 3rd (middle) wave, which means a shallow correction lies ahead and then a Subminuscule 5th wave push upward. That 5th wave completion of Submicro 3 will trigger a larger, also shallow correction, and then a Submicro 5th wave push to the upside.

The preceding 3rd wave of Minuscule degree took about a week to run its course, and the current Minuscule 5th wave is in its 3rd trading day, so under the Elliott wave rule of proportionality, I would expect Minuscule 5 to be over within a week, perhaps two if it extends.

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, April 12, 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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