3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures reached a new high within the 4th-wave upward correction that began on October 27. The prior high was 4607.75, set on December 1. The new high is 4611.50 so far today.

The new high confirms that the initial subwave within the correction, wave A, is still underway, although it is nearing its end.

A reminder that under the rules of Elliott Wave Theory, a 4th wave can’t move above the starting point of the preceding 1st wave. So if the price moves above 4634.50, the analysis will be redone.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures whipsawed up to the 4590s and down to the 4560s after employment statistics for November were announced. The price then resumed to its sideways path near the lower end of the whipsaw, in the 4570s.

Unemployment dropped slightly to 3.7%. It as 3.9% a month earlier. The Sahm Rule, a sensitive signal of recession based on the unemployment rate, withdrew from 0.33 to 0.30. A reading of 0.50 signals that a recession is underway.

What does it mean? Economic news doesn’t drive the Elliott Waves on a price chart. It can, however, trigger the timing of transitions from one wave to another.

The overnight price fluctuations left undecided the ongoing conundrum of the chart’s Elliott Wave analysis of the 4th-wave upward correction that began on October 27: Did the correction’s initial subwave, wave A, end on December 1 at 4607.75 and the middle subwave, wave B begin, or is wave A still underway and wave B an expectation for the future?

For the moment I’m retaining the A-wave scenario on the chart — Wave A is still underway — where it has been since late November.

The low in overnight trading, slightly below the price at preceding closing bell, was 4548.75, still above the low of the small-degree rise that began on November 30 from 4544.75 I’ll consider switching to the wave B scenario.

If it rises above the December 1 high of 4607.75, then I’ll consider wave A to still be unambiguously underway.

In any case, no subwave of the wave 4 correction can move beyond the starting point of the preceding 1st wave, 4634.50. If it does move above that level, then I’ll scrap the entire analysis and analyze anew.

The smallest wave that I’m tracking on the chart is a rising low-degree 5th wave five levels below wave 4 in the fractal structure of the chart. When that low-degree wave is complete, it will also complete a series of increasingly larger 5th waves up three degrees, and the A wave a degree larger that contains them all.

See the “Reading the Chart” section below for an explanation of the fractal structure used in Elliott Wave Theory.

What are the alternatives? The two alternatives, the A-wave and B-wave scenarios, remain equally likely.

[S&P 500 E-mini futures at 3:30 p.m., 80-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.
• The initial wave of the correction, wave A{-4}, continues.
• Wave A{-4} has reached its 5th and final subwave, wave 5{-5} and a series of smaller 5th waves, down to wave 5{-8}.
• Within wave 5{-8}, declining wave 4{-9} is underway. It will be followed by rising wave 5{-9}.
• When wave 5{-9} is complete, it will cascade up the fractal structure, also ending wave 5{-5} and its parent, wave A{-4}.

Alternative Analysis:

• Wave A{-4} ended on December 1 and wave B{-4} is underway.

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)
• 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, December 8, 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.