3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 dropped slightly from overnight high and then rose a little, in what is either a continuation of wave 5 of Bitsy degree to the upside or the early steps in a wave 4 correction of Subminuscule degree, one step larger than Bitsy. I’ve updated the chart.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a new high in overnight trading, 4192.50. I count that rise as part of the final leg of the uptrend that began April 22.

What does it mean? Completion of that uptrend will be followed by a shallow correction at a larger degree, the uptrend that began April 9.

What’s the alternative? It’s possible that the present high marks the end of the April 22 uptrend.

What does Elliott wave theory say? By my count, the price is in the 5th wave of Subbitsy degree within wave 5 of Bitsy degree within wave 3 of Subminuscule degree.

My trades. Today begins the entry period for positions using options that expire on June 21. The period extends to May 11, with May 4 being the midpoint. I’ll be aiming for a May 4 entry, assuming I can find a prospect with sufficiently high implied volatility that allows me to avoid an earnings announcement.

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, April 27, 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.