3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 dropped sharply and recovered before resuming the decline in wave 5 of Subbitsy degree within wave A of Bitsy degree. I’ve updated the chart.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight as it nears an end to the first leg of a downward correction that began April 29 from 4211.

What does it mean? After the rise is complete, a decline will carry the price back down, most likely below 4120.50, completing the first leg of the correction.

What is the alternative? It’s possible to count the decline to the May 4 low of 4120.50 as completing the correction. If the rise carries the price above 4211, then the alternative count is correct.

What does Elliott wave theory say? Under the principal count, the overnight rise is wave 4 of Subbitsy degree within wave A of bitsy degree, which in turn is the first wave of a three-wave correction within wave 4 of Subminuscule degree. Under the alternative count, the fall to 4120.50 was wave C of Bitsy degree, completing wave 4 of Subminuscule degree, and the overnight rise is the beginning of wave 5 of Subminuscule degree.

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, May 5, 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.