3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures retraced during the session, back into the 5080s, as the middle subwave, rising wave B, of the 4th-wave downward correction that began in mid-February works through its first subwave, declining wave A.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures kept to to a narrow range after trading resumed overnight, remainiing largely in the 5080s and 5090s after declining slightly at the opening and rising a bit higher, above 5100, as the opening bell approached.

What does it mean? The 4th-wave downward correction that began on February 12 continues. There is some ambiguity regarding where the waves are situated in relation to fractal structure of the chart.

The count that I’ve used has the following structure, working down from wave 4 from the larger subwaves to the smaller and using the degree designations, in curly brackets, as they appear on the chart: Rising wave B{-3}, rising wave A{-4}, declining wave B{-5}.

See the “Reading the chart” section, below, for more on degrees and their labeling.

In any case, rising wave B{-3} will have three subwaves at the {-4} degree. Once the B wave is complete, it will be followed by a declining C wave that will decline significantly, completing the correction.

The 4th-wave correction will in turn be followed by a rising 5th wave of uncertain magnitude.

What are the alternatives? So where’s the ambiguity? What I’m labelling as degree {-4} could instead be degree {-3}, one degree larger, pushing everything up one in the fractal hierarchy. I chose my labeling based on the consistency with the subwaves prior to the 4th-wave upward correction (wave 4{-2}), but consistency is a tendency, not a firm rule, so there’s a lack of certainty.

[S&P 500 E-mini futures at 3:30 p.m., 25-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 downward correction, wave 4{-2}, that began on February 12, 2024.
• Wave 4{-2} is in its second subwave, wave B{-3}, which in turn is in wave A{-4}, its initial subwave.
• Wave A{-4} is in its middle subwave, wave B{-5}.

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:
• 4{-2} Minute, 2/12/2024, 5066.50 (down)
• B{-3} Minuette, 2/21/2024, 4959 (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 26, 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.