3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 declined sharply from the May 9 peak of 4238.25, suggesting that wave 3 of Bitsy degree is complete, and a wave 4 downward correction has begun. I’ve updated the chart.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose slightly in overnight trading, to 4238.25, and then pulled back a little.

What does it mean? The uptrend that began May 4 from 4120.50 is still underway and may have completed the middle leg of its rise. The pattern suggests that there is still more upside ahead.

What does Elliott wave theory say? The rise from May 4 is wave 1 of Bitsy degree within wave 5 of Subminuscule degree. This is happening within wave 5 of Minuscule degree, which began on April 7 from 4056.50. Bitsy wave 1 will be followed by a downward wave 2 correction, probably a sharp one, and then an energetic 3rd wave rise, a shallow 4th wave downward correction, and a final 5th wave push to new highs, completing wave 5 of Subminuscule degree, its parent wave, 5 of Minuscule degree, and its grandparent wave, 3 of Submicro 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 10, 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.