SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose through the day, as wave C within wave 2 of Subbitsy degree continued. No change in the analysis. Chart updated.

10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise in overnight trading, reaching a high so far today of 4135.

What does it mean? Continuation of the rise situates the S&P 500 in the middle wave of a three-wave correction to the upside.

What’s the alternative? If the price should rise above the May 9 high of 4238.25, then the decline that ended on May 13 was a downward correction and the rise that began on months earlier is continuing.

[S&P 500 E-mini futures at 3:30 p.m., 210-minute bars, with volume]

What does Elliott wave theory say? By my principle analysis, the wave 2 of Subbitsy degree correction that began on May 13 has completed its first internal wave A to the upside and its second, wave B to to the downside. The present rise is wave C to the upside. Second waves typically are simple Zigzags, so the completion of wave C will likely end Subbitsy wave 2 and mark the start of Subbitsy wave 3, an energetic move to the downside. This is all happening within the 1st wave of Bitsy degree and higher, the first tentative steps of a significant downtrend.

By my alternative analysis, the decline that began on May 9 is a continuation of a 4th wave correction within wave 5 of Minuette degree, which began on March 4.

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 20, 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.

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