3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures continued to rise during the session, reaching deeper into the 5040s. This morning’s Elliott Wave Analysis is unchanged. The uptrend that began on February 6 continues and is in its final subwave. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose sharply overnight into the 5040s and then returned immediately to its starting point..

What does it mean? Elliott Wave Theory sees the rise as the small 4th-wave downward correction reaching its end and a 5th-wave uptrend beginning, the final subwave within a larger 5th-wave uptrend that began on February 6. This is all happening within a series of three uptrends of increasing size, follow by a still larger 3rd wave uptrend that began on October 27, 2023, from 4143.50, roughly 900 points below the overnight high.

What happens next? When the smallest 5th-wave uptrend — wave 5{-7} on the chart — is complete, it will also be the end of the four larger 5th-wave uptrends — waves 5{-6}, 5{-5}, 5{-4} and 5{-3} — and of the still larger 3rd-wave uptrend, wave 3{-2}.

The wave labels on the chart have the wave number followed by a degree number as a subscript in curly brackets showing how many degrees away — smaller for negative numbers — the wave is from what the developer of Elliott Wave Theory, R.N. Elliott, called the Intermediate degree. The present Intermediate degree, wave 5{0}, began in December 2018.

A large 4th-wave downward correction, wave 4{-2}, will follow wave 3{-2}. Fourth waves tend to end within the 4th subwave within the larger 3rd subwave of the still larger 4th-wave downward correction. That would be wave 4{-4} within wave 3{-3} within wave 3{-2}. Wave 4{-4} began on December 20, 2023 from 4830.75 and ended on January 5 at 4702.

That’s the target range of the future wave 4{-2}: between 4830.75 and 4702.

What are the alternatives? The rapid retreat from the overnight high brings some ambiguity the chart. True: The rise reached a new high for the S&P 500 futures, meaning wave 5 is underway. That’s the principal analysis. Also true: It’s possible that the price will continue significantly lower, meaning that wave 5 ended at overnight peak.

[S&P 500 E-mini futures at 3:30 p.m., 20-minute bars, with volume]

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, an uptrend, wave 5{-1}, began on October 13, 2022 and is underway.
• Wave 5{-1} is the parent wave of a uptrend, wave 3{-2}, that began on October 27, 2023 and is in wave 5{-3}, the last of five subwaves.
• Wave 5{-3} is in turn in its last subwave, wave 5{-4}, which is also in its final subwave, wave 5{-5}.
• When wave 5{-5} is complete, it will also be the end of waves 5{-4}, 5{-3} and 3{-2}, and a downward correction, wave 4{-2}, will begin.
• Within wave 5{-5}, uptrending wave 5{-6} is underway, and one degree further down, uptrending wave 5{-7} began on February 8.

Alternative Analysis:

• Uptrending wave 5{-7} ended on February 8, also bringing waves 5{-6}, 5{-5}, 5{-4}, 5{-3} and 3{-2} to an end.

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:
• 5{-1} Minor, 10/13/2022, 3502 (up) (futures), 3491.58 (up) (index)
• S&P 500 Futures:
• 3{-2} Minute, 10/27/2023, 4143.50 (up)
• 5{-3} Minuette, 10/27/2023, 4143.50 (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, February 9, 2024

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.