SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 worked its way downward by a little from the early afternoon high of 4210 on the futures, 4213.38 on the index. The rise is part of wave A wave within wave 2 of Subbitsy degree. After the A wave comes a downward B wave and then an upward C wave, completing the second pattern in the compound correction. Chart updated.

9:55 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose sharply at the opening bell, to a high so far of 4209.25.

What does it mean? The pattern to me looks like the second alternative scenario I outlined in yesterday’s post: A declining separator in a compound correction, following the end of one corrective pattern and the preceding that start of another. The rise is the start of the next corrective pattern.

What’s the alternative? If the price moves above 4238.25, the high of May 9, then the analysis switches to the third alternative: The uptrend that began last year is still underway and higher prices lie ahead. If the price reverses and drops below 4029.25, the low of May 13, then the principle analysis from yesterday holds sway; the energetic middle portion of the downtrend that began May 9 is underway.

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

What does Elliott wave theory say? Under the principle analysis, the decline that began May 25 from 4212.25 is wave X, a separator wave within uptrending wave 2 of Subbitsy degree. Wave X is complete and is followed by wave A of a second pattern within a compound correction. The corretive pattern can be a Zigzag, a Flat or a Triangle.

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 xx, 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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