SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 traded slightly below its peak of the day as wave 5 of Minuscule degree resumed its rise. It is the final wave of that relatively small degree within a much larger uptrend, wave 3 of Minor degree, that began on February 23, 2020, at the floor of the crash that marked the early weeks of the pandemic. Minor 3 will be followed by a significant correction that will remain above that February 2020 low, 2191.86 on the index, and will followed by still higher highs months or perhaps more than a year down the road. The high so far today on the futures so far is 4362.50, and on the index, 4370.52. I’ve updated the top chart of this post.

12:45 p.m. New York time

Midday updated. And the ambiguity on the chart has been resolved. The S&P 500 moved to a new high, meaning that the decline from the July 7 high, ending wave 3 of Minuscule degree, was a 4th wave correction, down to 4280.25. The price subsequently rose to a high so far today of 4357.75 on the futures, and 4365.89 on the index. Long story short: The uptrend that began on June 20 is still underway, as is the larger uptrend that began on February 23, 2020.

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

10:05 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise in overnight trading, having remained below the July 7 high of 4353.25 and above the June 30 low of 4269.25.

What does it mean? By remaining within the range defined by those two prices, the meaning of the track set by the price remains ambiguous.

A move above the July 7 high would mean that the decline that followed the peak is a correction within an ongoing rise.

What’s the alternative? A move below the June 30 low would mean that the decline from July 7 is the beginning of a downtrend that will reach significant proportions.

[S&P 500 E-mini futures at 10:04 a.m., 30-minute bars, with volume]

What does Elliott wave theory say? On the chart I’ve analyzed the movements from July 7 to match the first alternative, with the expectation that the price will move above the July 7 high, which marked the end of wave 3 of Minuscule degree. The Minuscule wave 4 correction to the downside is now underway.

Under the second alternative, the July 7 high would mark the end of wave 5 of Minuscule degree, and also of increasingly larger 5th waves up five levels to Minute degree, and above that, wave 3 of Minor degree. The subsequent decline is wave 1 of Minuscule degree, a small step in what will be a major downtrend.

As long as the price remains between the July 7 high of 4353.25 and the June 30 low of 4269.25, I can’t choose between those alternatives.

See yesterday’s analysis for a discussion of why the 4269.25 level is important.

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, July 9, 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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