SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. Today’s high of the day remains at 4532.25. No change to the morning analysis and the 1:55 p.m. update. I’ve updated the chart.

1:55 p.m. New York time

Approaching a new high. The S&P 500 is approaching the all-time high it set on September 3. The present high so far today is 4532.25 on the futures The September 3 futures peak was 4549.50.

There is nothing in the rules of Elliott wave analysis that forbids the present rise from exceeded the September 3 peak. The S&P 500 is present in wave 5 of Micro degree; the September 3 peak was wave 3 of Micro degree. It is normal and expected for the 5th wave to exceed the prior 3rd wave of the same degree. So what we’re seeing in the markets today is business as usual.

On the other hand, there is nothing that requires the present 3rd wave of Subminuscule degree to exceed the September 3 high, which is three degrees larger. So today may not be the day the price hits a new high. No guarantees, either way.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded below yesterday’s high, 4517.50, in overnight trading, rising back to that price minutes after the opening bell this morning.

What does it mean? The pause in the rise is a shallow correction within middle leg of an uptrend that began on October 12. The pause will be followed by a resumption of the uptrend.

What’s the alternative? At this point the chart has a great deal of clarity and I have no alternative analysis. As always, price movements can turn ambiguous at any moment.

[S&P 500 E-mini futures at 3:30 p.m., 105-minute bars, with volume]

What does Elliott wave theory say? The present sideways movement is wave 4 of Subbitsy degree within wave 5 of Bitsy degree within wave 3 of Subminuscule degree. Fourth wave corrections tend to be shallow, and this very low degree 4th wave is following the pattern.

The end of Bitsy 5 will also be the end of the parent, Subminuscule 3, which will be followed by a Subminuscule 4th wave correction two degrees larger than Subbitsy. Afterward, wave 5 of Subminuscule degree will begin, pushing higher, where its completion will also end the parent, wave 5 of Minuscule degree and the grand-parent, wave 1 of Submicro degree.

With the end of Submicro 1, things start to get interesting. Submicro 1 and its parent wave, Micro 5, began on October 1 from 4269. Submicro 1 will be followed by a 2nd wave correction, and 2nd waves tend to retrace a great deal of the preceding 1st wave. So with wave 2 of Submicro degree I’m expecting the price to fall back in to the region of Submicro wave 1’s beginning — the upper 4200s or, if the correction stops short, perhaps the lower 4300s.

Following the 2nd wave correct, the uptrend will resume, in the form of an energetic wave 3 of Submicro degree.

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, October20, 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.

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.