SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose to a new high within an upward correction within a larger downward correction that began on November 5. The new high and so far reached 4709.75 on the futures and has eclipsed yesterday’s high of 4697.50. If the price moves above the November 5 peak of 4711.75, then that will mean that the rise that began on October 6 — wave 3 of Subminuette degree — subscript {-8} — is still underway, and the downward/sideways movement from November 5 was of a lower degree. The start of wave 3 of Subminuette degree is shown on the chart in red.

Today’s high validates the alternative analysis from this morning, and it becomes the new principal analysis. The new alternative would be a push above the November 5 high.

So, a You Are Here listing: Under the principal analysis, the S&P 500 is within uptrending wave 4 of Subbitsy degree {-10} within downtrending wave A of Bitsy degree {-9} within downtrending wave 4 of Subminuette degree.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded within a narrow range overnight, remaining below Monday’s high of 4697,50.

What does it mean? My principal analysis sees a complex of nested movements: The non-committal move is an early stage within the final low-level decline within the first downward leg of a three-part sideways correction that began November 5 from 4711.75.

What’s the alternative? My alternative analysis places that final low-level decline in the futures, as the price continues to trace a small correction before the decline. When that small correction is over, the final decline that will bring the first part of the larger correction to an end.

Charts. The upper chart is half an hour before the closing bell, showing the alternative analysis, which was verified. The lower chart is shortly after the opening bell and shows this morning’s principal analysis, which has now been discarded.

[S&P 500 E-mini futures at 3:30 p.m., 90-minute bars, with volume]
[S&P 500 E-mini futures at 9:35 a.m., 70-minute bars, with volume]

What does Elliott wave theory say? Under my principal analysis, the sideways movement is an early stage of wave 5 of Subbitsy degree — a {-10} subscript on the chart — which is the final, declining portion of wave A of Bitsy degree {-9} within a wave 4 correction of Subminuscule degree {-8}. Bitsy wave A will be followed by a rising B wave that may again reach into the 4690s, and then by declining C wave that will complete Subminuscule wave 4. That 4th wave will be followed by Subminuscule wave 5, which will push above the November 5 peak to new heights.

Under my alternative analysis, the sideways movement is a subwave of wave 4 of Subbitsy degree, a rising correction that will be followed by Subbitsy wave 5. This analysis pushes Subbitsy wave 5 into the future, and when it is complete, the market will progress as described in my principal analysis.

Bottom line: The price will break out above the November 5 peak of 4711.75, the end of wave 3 of Subminuscule degree. The difference between the two analyses is about the timing of that breakout. Under the principal scenario, that breakout will happen sooner; under the alternative, later.

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, in the ever-changing markets, 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, November 16, 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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