3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures paused in their rise, remaining between the 5130s and just below 5100. In Elliott Wave Theory, the pause is most likely a correction within rising wave B{-6}. (See this morning’s “What does it mean” section for a discussion of wave B{-6}’s position in the fractal hierarchy.)

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from the 5080s into the 5120s.

What does it mean? The rising second subwave — wave B — of a declining larger B wave buried deep within a larger downward correction is underway.

Applying Elliott Wave Theory to the chart: The larger B wave is labeled B{-5}, and the smaller B wave is labelled B{-6}. The subscripts in brackets show the relative position of each wave within the fractal structure of the chart. The smaller the number in the subscript, the further down the fractal chain the wave resides. See “Reading the chart”, below.

The larger downward correction, wave 4{-2}, began on February 12. It is in its middle subwave, rising wave B{-3}. With wave B{-4} now underway and in its middle wave, B{-6}, rising wave B{-6} still has some time to go before it reaches completion.

Eventually, the downward correction, wave 4{-2}, encompassing all of the smaller subwaves mentioned above will reach its end and will be followed by an uptrending wave 5{-2} that will carry the price significantly higher.

What are the alternatives? As is often the case in Elliott Wave Analysis, there is some ambiguity about the degree designations. For example, should the end of wave A{-6} more accurately be labeled the end of wave A{-5}.

[S&P 500 E-mini futures at 9:35 a.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 B{-4}, its middle subwave.
• Wave B{-4} is in its initial subwave, wave A{-5}.
• Internally, wave A{-5} is in its second subwave, wave B{-6}.

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 6, 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.