SP500 Analysis

1:30 p.m. New York time

Two and a half hours before the closing bell. I’m breaking off early in order to get a Covid-19 booster jab. The S&P 500 has barely budged during the regular trading session. No change in the analysis. I’ve updated the chart.

9:40 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a high of 4472 in overnight trading and then fell.

What does it mean? If the correction that began September 3 is a sideways pattern, as I think it will prove to be, then the rise that began September must reach at least 4523.93 before it ends, a 90% retracement of the preceding decline that began September 3. Under this pattern, the decline which will follow the present rise will return to the 4290s.

What’s the alternative? If the rise falls short of 4523.93 then the correction is tracing a more directional pattern. I.e., at it’s completion, it likely will reach a lower level than the 4290s, probably much lower.

[S&P 500 E-mini futures at 1:30 p.m., 55-minute bars, with volume]

What does Elliott wave theory say? The decline from September 3 is wave 4 of Micro decree, which appears to be taking a Flat pattern. Internally, the price is in wave B of Submicro. Within a Flat correction, the B wave must retrace at least 90% of the preceding A wave. In this correction, that means the price must rise to at least 4523.93.

If the price moves above 4523.93, then the wave 4 pattern is something other than Flat: Perhaps a Zigzag or a Triangle of some sort.

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 27, 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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