SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has continued to rise during the day, but only slightly, reaching 4348.75 on the futures and 4356.94 on the index. So far it has retraced 78% of the decline from July 14. More importantly, this rise, labeled a 4th wave has moved beyond the end of the 1st wave, violating a firm rule of Elliott wave analysis.

I’ve updated the chart but left the labelling as it was this morning — time constraints — and will post a revised labeling on Thursday morning. At this point I’m not all sure what’s going on.

9:45 a.m. New York time

What’s happening now? The S&P 500 E-mini futures paused overnight, rising only slightly above its level at yesterday’s closing bell and peaking 46 points below the July 14 high.

What does it mean? The slowing of the rise suggests that the correction of the decline that ended on July 18 is nearing an end, or possibly that the first leg of that correction is ending.

What’s the alternative? If the price resumes its rise today, exceeding the July 14 high of 4384.50, then the subsequent decline has been a correction within the continuing rise that began on July 20, and at a larger scale, began in Februrary 2020.

[S&P 500 E-mini futures at 3:30 p.m., 45-minute bars, with volume]

What does Elliott wave theory say? I’ve counted the low of 4224 on July 19 as the end of wave 3 of Minuscule degree within wave 1 of Submicro degree, the first steps of a downtrend that will eventually reach below 2000. (See yesterday’s analysis for a big picture discussion of the chart.) The subsequent rise, up to a high of 4338.50 at today’s opening bell, is wave 2 of Minuscule degree, and 2nd wave correction. It is possible that the rise is the first wave, the A wave of Subminuscule degree, within Minuscule wave 2.

Were the price to exceed the July 14 peak of 4384.50, then wave 5 of Submicro degree, which began on June 20, would still be underway. The subsequent decline would be a correction within that 5th wave.

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 21, 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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