SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued a sharp from yesterday’s peak, as a downward correction took hold. The decline is wave A of Bitsy degree, the first wave of what will probably be a Flat correction, wave 4 of Subminuscule degree. I’ve updated the chart.

2:20 p.m. New York time

My Trades. I’ve exited my bear call options spread position on FXI for a 182% profit and have updated the analysis with results.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell from yesterday’s peak of 4476.50

What does it mean? By my principal count the decline is the beginning of a correction of the rise that began August. 4 from 4391.25 that will most likely be a shallow one.

What’s the alternative? The decline may be a correction at a smaller level within an ongoing rise that began yeterday.

[S&P 500 E-mini futures at 3:30 p.m., 75-minute bars, with volume]

What does Elliott wave theory say? By my principal count, yesterday’s high marked the end of wave 5 of Bitsy degree and of its parent, wave 3 of Subminuscule degree. The subsequent correction, wave 4 of Subminuscule degree, will be a shallow, sideways movement, as is common with 4th waves.

By the alternative count, wave 5 of Bitsy degree is continuing its uptrend, and the decline is a correction of Subbitsy degree — one degree lower — within Bitsy wave 5.

All of this is happening within wave 3 of Minuscule degree, which began on August 3, within wave 5 of Submicro degree, which began on July 19 from 4224.

Completion of Minuscule wave 3 will mark the start of a 4th wave correction, most likely shallow but of greater significance than the recent pullbacks. The last Minuscule degree correction was wave 2, lasting from July 26 to August 3.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, we can judge that similarity of structure only after the fact.

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

By Tim Bovee, Portland, Oregon, August 17, 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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