SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 fell during the day and then paused in the small-degree initial steps in a 5th wave rise to the upside. No change in the analysis beyond the 9:57 a.m. update confirming that wave 5 of Subbitsy degree is underway. I’ve updated the chart, below.

9:57 a.m. New York time

New high. And the S&P 500 futures have reached a new high, 4544, confirming my principal analysis. Chart updated.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures completed the third leg of their correction from their August 31 high of 4542.25.

What does it mean? Most simple corrections have three legs — down, up, down for a downward correction. The next movement is a resumption of the trend, a rise in this case. Some corrections extend in compound patterns. In that case, the next upward movement is a separator that is followed by second corrective pattern.

My principal analysis, seen on the chart, treats the overnight rise as an early stage of the resumption of the uptrend that began on August 26. It will be confirmed by the price moving above 4542.25.

What’s the alternative? The resumed rise is a separator and will be followed by another corrective pattern, most likely with three subwaves.

[S&P 500 E-mini futures at 3:30 p.m., 40-minute bars, with volume]

What does Elliott wave theory say? Under my principal analysis, the overnight rise is the beginning of wave 5 of Subbitsy degree within a series of four 5th waves of increasingly higher degree, up to wave 5 of Submicro degree. The whole fractal series is within wave 3 of Micro degree. Wave 5 began within the completion of the wave 4 correction of Bitsy after yesterday’s closing bell.

Wave 5 of Subbitsy degree will push upward to new highs, exceeding the August 31 peak of 4542.25. The end of Subbitsy 5 will also be the end of wave 3 of Micro degree and the beginning of a 4th wave correction of the rise that began on May 19 at 4059.50.

Under the alternative analysis, the present rise is wave X of Subbitsy degree, a wave that separates two corrective patterns in a compound structure. Subbitsy wave X will end below the August 31 high of 4542.25.

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, September 2, 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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