SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued its rise during the day. No change in the analysis. Chart updated.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight in the third leg of an upward correction within a larger downtrend.

What does it mean? Corrections of this sort tend to come with three legs, and so this low-level correction is nearing an end.

What is the alternative? Corrections sometimes take more complex patterns, and so although the third leg typically marks the final stage of a corrective pattern, this low-level correction could prove to be complex.

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

What does Elliott wave theory say? Under my principal analysis, the rise is wave C of Bitsy degree within wave 2 of Subminuscule degree within wave 1 of Minuscule degree wave within an 4th-wave downward correction of Submicro degree that began on July 19. That 4th wave will be followed by a Submicro wave 5 to the upside that will reach new heights. Closer in, the present wave 2 of Subminuscule degree will be followed by a powerful 3rd wave to the downside.

Although 2nd waves tend to take the simple three-wave form, there is nothing in the rules of Elliott wave analysis that prevents a 2nd wave from extending in more complex patterns. That applies to wave 2 the Subminuscule degree. The higher Submicro degree is a 4th wave, and such corrections often display complex patterns. So Submicro wave 4 potentially could take some time to reach completion.

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 20, 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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