SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 barely budged during the day as the closing bell approached. The high on the futures so far has been 4361.25, and on the index, 4369.87. No change in the analysis. I’ve updated the chart.

9:35 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 of 4361.25, within 25 points of the July 14 high, 4384.50.

What does it mean? The price on Wednesday violated a rule of Elliott wave analysis, requiring a re-analysis of the chart. The principle analysis had considered the July 14 peak to be the end of a major uptrend and the beginning of a downtrend. The new principle analysis (formerly the alternative) counts the uptrend as still underway.

Under the new analysis, I expect the price to move above 4384.50 and to eventually come close to the upper boundary of the price channel that began on March 17, which would bring it to the 4500s or higher.

What’s the alternative? The price could fail to reach the upper boundary of the price channel, which appeared to be the case before yesterday, ending the uptrend and beginning a major downtrend.

[S&P 500 E-mini futures at 3:30 p.m., 6-hour bars, with volume]

What does Elliott wave theory say? Under the old principle analysis, the July 14 peak was counted as the end of wave 5 of Submicro degree, ending an uptrend that had begun on July 20 and a larger-degree uptrend that had begun on February 23, 2020.

The new analysis labels the July 14 high as the end of wave 3 of Submicro degree, the subsequent decline as Submicro wave 4, and the rise that began July 19 and is still underway as Submicro wave 5.

The end of Submicro 5 will also be the end of the wave 3 of Micro degree and of the parent wave, Subminuette wave 5. Above that level, in ascending degrees, the end of Subminuette wave 5 will also mark the end of Minuette 5, Minute 5 and Minor 3.

The price channel on the chart tracks the Subminuette degree. The end of Subminuette wave 5, in an ideal form, would approach or throw itself over the upper boundary of the channel. But that’s an ideal, not a requirement. It could very well fall significantly short of that boundary. That scenario is my alternative analysis.

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 22, 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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