SP500 Analysis

3:30 p.m. New York time

Half an hour before the closing bells. The S&P 500 traded has traded in a narrow range during the session, remaining below the overnight high of 4712 on the futures. My analysis is unchanged. I’ve updated the chart.

2:30 p.m. New York time

My trades. I’ve entered a short bear call options spread on SPY and posted an analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise in overnight trading, reaching 4712 before the opening bell.

What does it mean? The third leg of a correction that began December 1 is still underway. It will be followed by a decline that likely will reach below 4497.75, perhaps significantly so.

What’s the alternative? The end of the corrective pattern will be followed by a decline that remains above 4497.75, and then by a second uptrending corrective pattern.

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

What does Elliott wave theory say? The present rise is uptrending wave C of Subdeci degree — subscript {-12} — within uptrending wave 4 of Deci degree {-11}.

Under my principal analysis, the end of wave C will also mark the end of its parent 4th wave and the beginning of downtrending wave 5 of Deci degree, which typically will reach beyond the start of wave 4, which began on December 1 from 4497.75. A 5th wave sometimes comes up short — “truncated” is the term of art.

Under my alternative analysis, wave C of Subdeci degree will be followed by a declining X wave and then a new corrective pattern. The X wave will remain above the December 1 low.

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, December 8, 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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