3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose into the 5280s and for the most part stayed in that area, trading sideway for most of the session. This morning’s Elliott Wave Theory analysis is unchanged. The low-degree 4th-wave correction within a 5th-wave uptrend one degree larger continues. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued their decline after trading resumed overnight, reaching into the 5270s.

What does it mean? Elliott Wave Theory sees the decline as 4th-wave downward correction of low degree that began on March 21, part of a 5th-wave uptrend, one degree larger, that began on March 15.

Bigger picture: The 5th wave is a subwave of four levels of 3rd waves, each larger by a degree than the one that came before, all within a 5th-wave uptrend that began on October 13, 2022, from 3502.

The series of rising 3rd subwaves means that the larger 5th-wave uptrend still has a lot of life left in it before reaching its end, since each 3rd subwave, when it reaches completion, must go through a 4th-wave downward correction and then a 5th wave rise before reaching its end.

What are the alternatives? None at present. They will surely develop.

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

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

Principal Analysis:

• Rising wave 5{0} is underway.
• It is in its final subwave, wave 5{-1}
• Within wave 5{-1}, rising waves 3{-2}, 3{-3} and 3{-4} are underway, as is the smallest wave labeled on the chart, wave 3{-5}.
• Wave 3{-5} is in its 5th subwave, wave 5{-6}
• Within wave 5{-6}, the next-to-the-last subwave, wave 4{-7}, is underway.

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 25, 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

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Based on a work at www.timbovee.com.