SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued its rise today, reaching 4178.25 on the E-mini futures and 4183.13 on the index. No change in the analysis. Chart updated.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight from yesterday’s low of 4029.25.

What does it mean? My principle analysis sees the bounce as an upward correction within a downtrend, both of small degree. The rise might well retrace most of the decline from the May 9 high of 4238.25. These small moves are happening within a far larger downtrend.

What’s the alternative? If the price moves above the May 9 high, then the alternative analysis comes into play, seeing the decline from May 9 as a small correction within a larger uptrend.

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

What does Elliott wave theory say? By my principle count, the decline from the May 9 high is wave 1 of Bitsy degree, the first small step of a very large downtrend. Within Bitsy 1, yesterday’s low marked the end of wave 1 of Subbitsy degree and the beginning of Subbitsy 2. Second waves often retrace much of the preceding first wave. The upward correction will be followed by further decline, in an energetic wave 3 of Subbitsy degree.

By my alternative count, the decline from May 9 is a very low level A wave correction, which will be followed waves B and C, and perhaps be extended in a compound structure before resuming the rise and exceeding the May 9 high.

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 14, 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.

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.