3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures reached a session high of 4580.50 and then retreated slightly, to the 4550s. The high meets all of the requirements of an end to the A wave within the upward correction that began on October 27. However, it’s not necessarily the end.

So we’re back to two scenarios of equal likelihood. Within the upward correction, either…

• Scenario #1: Rising wave A ended continues to work through it’s 5th and final wave, or
• Scenario #2: Rising wave A ended on November 22 and falling wave B has begun.

I’ve updated the chart, retaining Scenario #1 as the principal analysis.

12:20 p.m New York time

Trading the rest of the week. The QQQ position closed today will be my last trade of the week. I’m reluctant to hold the 1DTE positions longer than overnight, and certainly not through Thursday’s Thanksgiving Day market holiday. So my next in-trade will be on Monday, November 27.

12:10 p.m. New York time

QQQ Iron Fly exit. I’ve exited my Iron Fly position on QQQ for a 1.3% loss and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight and reached into the 4570s as the opening bell sounded. The price moved beyond the November 20 high, 4571.

What does it mean? The overnight rise is the 5th and final wave of a low-degree movement that began on November 16. That small wave, 5{-8} on the chart, will when complete will also be the end of its parent 5th waves three levels higher in the fractal structure of the chart: Waves 5{-7}, 5{-6} and 5{-5} on the chart. And when those four levels of 5th waves are complete, then the first subwave of the upward correction, the A wave, will have reached its end, and the middle wave B will begin.

The upward correction is a 4th wave, wave 4{-3} on the chart, the next-to-the-last wave within a downtrending 3rd wave that began on July 27, wave 3{-2} on the chart.

Within the 4th wave correction, wave A has five subwaves, meaning that the correction is taking the form of a Zigzag. A constraint on 4th waves is that they never move beyond the start of the preceding 1st wave, 4634.50 in this case.

The B wave of a Zigzag will generally retrace 38% to 79% of the preceding A wave. We’ll be able to calculate that range once we know the endpoint of wave A.

What are the alternatives? None at present. The next ambiguity will come at the next peak: Is wave A complete, or is there a bit more upside remaining.

Afternoon addition: As indeed it did. See “Half an hour before the closing bell”, above.

[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, updated to coincide with this afternoon’s 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.
• Lower still, two scenarios of equal probability:
  • Scenario #1:
    • Within wave 4{-3}, wave A{-4} continues.
    • Further down the list, wave 5{-5}, 6{-5}, 7{-5} and 8{-5} are underway and nearing completion.
  • Scenario #2:
    • Wave A{-4} ended on November 22 and wave B{-4} began its downward trek.

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)
• 4{-3} Minuette, 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 22, 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.