SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 spent the day in a narrow range, staying below the early morning high of 4992 on the futures, 4492.81 on the index. No change in the analysis. I’ve updated the chart.

Also posted. See my analysis of BABA, posted this morning.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose to 4492 in early morning trading and then pulled back slightly.

What does it mean? My principal analysis treats the peak as the end of the third wave of a five-wave uptrend that began on August 19. It will be followed by a shallow correction and then a final push to higher highs.

What’s the alternative? Equally plausible, the alternative is that the third wave is still underway and the subsequent correction lies in the futures.

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

What does Elliott wave theory say? Under the principal analysis, used on the chart, the overnight high marks the end of wave 3 of Bitsy degree within a series of 5th waves: In ascending order, Subminuscule, Minuscule and Submicro degrees. All of this is within wave 3 of Micro degree, which began its rise on May 19 from 4055.50

The subsequent decline begins a correction, wave 4 of Bitsy degree, which will be shallow and will be followed by Bitsy wave 5 which will attain new heights and mark the end of the 5th waves and of wave 3 of Micro degree.

Under the alternative analysis, wave 3 of Bitsy degree is still underway. That will be confirmed if the price rises above 4492 without having completed a correction of at least three waves internally.

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 24, 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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