SP500 Analysis

10:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to work their way lower in overnight trading.

What does it mean? The decline is the second wave within a second corrective pattern in an uptrend compound correction that began on May 13. The second pattern appears to be taking a shallow form.

What’s the alternative? It’s still, barely, possible to interpret the decline as the start of a significant movement in the downward direction of the main trend. See the Elliott wave theory section for more. It’s also possible, although unlikely, to interpret the entire decline from May 9 as a correction within an ongoing uptrend.

[S&P 500 E-mini futures at 10:47 a.m., hourly bars, with volume]

What does Elliott wave theory say? By my principle analysis, the high on May 27 of 4217.50 was the end of the A wave within the second pattern of a compound wave 2 correction at the Subbitsy degree. The internal structure of wave A lends credence to this interpretation as opposed to the first alternative analysis. It is composed of three waves, which is the pattern we see in Flat corrections. Had there been five waves, then the structure have greater ambiguity, since five waves can be a Zigzag pattern within a correction, or a 1st wave within a main trend. With three waves, Subbitsy wave 2 must still be underway.

The second alternative analysis — a correction beginning May 9 within an ongoing wave 5 — continues to be a possibility. The internal counts prior to the May 9 peak have persuaded me that May 9 really did mark the end of the uptrend, but that’s not 100%

Holiday hours. The futures market in the U.S. will close at noon today and reopen at 5 p.m. The stock markets will remain closed, limiting the input that futures traders rely on in part. I plan no further update today unless there is a significant price move.

Learning and other resources. See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, May 31, 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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