3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures resumed their rise during the session, reaching into the 5150s. The low-degree C wave discussed in this morning’s analysis is underway. The alternative analysis, that wave C ended at the March 1 high, is off the table.

I’ve updated the chart.

2:05 p.m. New York time

Trades. I exited a short Iron Fly position on XSP, which I entered on a Friday and held over the weekend, exiting on Monday — expiration day — shortly after the opening bell for a 36.4% profit. My goal was a 25% return or better. I’ve updated the trade analysis with full results.

I entered a short Iron Fly position on SPY, one day before expiration, with the intent of exiting the next day with a return of 25% or better. I’ve posted a trade analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures resumed trading in the 5140s overnight and worked lower into the 5130s.

What does it mean? Elliott Wave Theory sees the rising middle subwave, wave B, of a 4th-wave downward correction that began on February 12 continues and is nearing the end of its first subwave, a rising A wave.

Within that smaller A wave is a still smaller rising C wave, now underway.

What are the alternatives? That smaller rising C wave may have ended at the March 1 peak, 5149.25. Time will tell. [Note: Invalidated by price movements during the session.]

That red line on the chart. A 4th wave tends to end within the range of the 4th subwave within the preceding 3rd wave of the same degree. The red line marks the upper boundary of that targrt range.

[S&P 500 E-mini futures at 3:30 p.m., 1-hour 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 final subwave, wave C{-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, March 4, 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.