3:30 p.m.. New York time

Half an hour before the closing bell. The S&P 500 futures moved slightly higher during the session, reaching 4436.75, and continued to keep the 61.8% Fibonacci retracement level in a firm embrace as the optimists and the pessimists battle over the future course of the price.

I’ve updated the chart, keeping the wave labeling as it was this morning, showing the first subwave, wave A, nearing completion within the 4th wave upward correction that began in late October. It’s equally likely that the session high marked the end of wave A, and wave B is now underway.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures stayed within a narrow range after trading resumed overnight, remaining below the 61.8% Fibonacci retracement level.

What does it mean?

The 4th wave upward correction that began on October 27 continues and is near the end of its first subwave, an A wave, or perhaps wave A ended at 4425.75, the November 10 high.

A 4th wave typically ends within the 4th subwave of the preceding 3rd wave. This A wave has already arrived at the upper boundary, which coincides with the 61.8% Fibonacci retracement level.

Here is the main question posed by the chart: Is wave A complete or not? If it is complete, then declining wave B is underway. If its not complete, then wave A still has some upside left.

A secondary question asks:, What form is the 4th wave correction taking? The preceding 2nd wave took the form of a Zigzag, with five subwaves within the A wave. According to the tendency toward alternation, the 4th wave should be a Flat, with three subwaves within the A wave.

The A wave so far can be counted as having three subwaves, but that first subwave is extraordinarily long in comparison with the two subwaves that have followed. It’s not unheard of for waves to be somewhat sloppy in their construction, especially at a turning point, but it’s something to take note of.

In any case, when wave A is over, wave B begins, and the B wave always retraces 90% or more of the preceding A wave, and usually retraces 100% to 138%. So the correction has some serious downside ahead of it.

Changes in the analysis. Over the weekend I continued to analyze the chart, refining the rather hurried reworking of the Elliott Wave analysis I had done late in the session on Friday.

The main revision was to raise the degrees by two levels, so that degree {-5} became degree {-3}, and degree {-6} became degree {-4}. These are the highest degrees possible that are consistent with my long-standing {-2} degree label for the July 27 peak. The higher degrees also are more in line with the same degrees in earlier movements.

Otherwise, no changes. The relationship between subwaves of the ongoing downtrend, wave 3{-2}, remain unchanged from Friday’s analysis.

What are the alternatives? None at present, beyond the main question posed by this chart: Is wave A complete or not?

[S&P 500 E-mini futures at 3:30 p.m., 210-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 and is underway.
• Within wave 3{-2}, an upward correction, wave 4{-3}, began on October 27.
• Wave 4{-3} internally has two possibilities, each of equal likelihood:
  • Either rising wave A{-4} continues and is nearing it’s end.
  • Or wave A{-4} ended on November 10 at 4425.75 and wave B{-4} began from that point.

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, 4634.50 (down)
• 4{-3} Minuette, 10/27/2023, 4122.25 (up)
• A{-4} Subminuette, 10/27/2023, 4122.25 (up)

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, November 13, 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

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Based on a work at www.timbovee.com.