3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell into the 4930s as Fed Chair Jerome Powell deliver his address at the Fed’s Jackson Hole, Wyoming, and then reversed, rising into the 4420s as the closing bell approached.

On the chart, the whipsaw pushed the endpoint of wave B{-4} a bit lower than I had marked it this morning, and I’ve made the adjustment. Otherwise, this morning’s analysis stands.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from the 4370s surpassing 4400 and continuing to rise a bit more after the opening bell.

Federal Reserve Chair Jerome Powell will address the Fed’s annual conference at Jackson Hole, Wyoming short after 10 a.m. New York time. Under the rules of Elliott Wave Theory, speeches and other news events have little to do with the movements of the markets, beyond the occasional whipsaw. The analysis below is independent of the speech.

What does it mean? The rise is the 3rd and final wave of the upward corrective pattern that began on August 18. In Elliott wave terminology, the upward correction is wave 2{-3}, and the overnight rise is part of wave C{-3}.

For this analysis I’ve had to use Elliott wave and degree numbering to describe the various possibilities. See the “Reading the chart” section, below, for an explanation of the numbering system.

What are the alternatives? There are two.

Alternative #1: All one degree lower

It’s possible that the subwaves within wave 2{-2} are a degree smaller within the fractal structure of the chart. If that is the case, then the overnight rise is wave C{-4}, a subwave of wave A{-3}.

Alternative #2: One wave one degree lower

It’s also possible that the wave labeled A{-4} is underway and the subsequent decline is a subwave, wave A{-5}.

[S&P 500 E-mini futures at 3:30 p.m., 50-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal analysis:

• A downtrend wave 3{-2}, began on July 27 is underway.
• Internally, wave 3{-2} complete its first subwave, wave 1{-3}, on August 18, and wave 2{-3}, an upward correction, began..
• Within wave 2{-3}, rising wave C{-4} is underway.

Alternative #1: All one degree lower

• Within wave 2{-3}, rising wave A{-4} is underway and is in its 3rd subwave, wave C{-5}.

Alternative #2: One wave one degree lower

• Within wave 2{-3}, declining wave B{-4} is underway and is in its 2nd subwave, rising wave B{-5}.

Big picture:

• Both the wave 2{-2} correction and wave 3{-2} downtrend are subwaves of wave 4{-1}, a downtrend that began on January 4, 2022.
• Wave 4{-1}, in turn, is a subwave of wave 5{0}, an expanding Diagonal Triangle that began on December 26, 2018.
• Wave 4{-1} may eventually reach the lower boundary of wave 5{0}, presently slightly below 1800 and declining further each day.
• Wave 4{-1} will be followed by rising wave 5{-1}, the final wave in the Triangle.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

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, August 25, 2023

Disclaimer

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.

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.