SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 traded in a narrow range today, dawdling along at same pace as in the overnight session. No change in the analysis. I’ve updated the chart.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued a slow rise through the 4190s after trading resumed overnight in a counter-trend movement within a downward correction.

What does it mean? The correction will be followed by a reversal to the downside that will reach below 4115.25, perhaps significantly below.

What’s the alternative? By my analysis the peak of 4211, reached on April 29, ended the rise that began April 22. It is possible that the decline since late April has been a pullback within the continuing rise and that the price will move to new highs.

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

What does Elliott wave theory say? The peak of April 29 ended wave 5 of Bitsy degree and its parent degree, wave 3 of Subminuscule degree. The decline that followed is the early sub-waves of wave A of Bitsy degree within wave 4 of Subminuscule degree.

The low degree Zigzag that I’ve labeled as waves 1 through 4 of Bitsy degree may in fact be of a smaller degree. In Elliott, there’s much ambiguity about the magnitude of a movement until it has had time to mature.

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, May 3, 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
Creative Commons 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.

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