3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose during the session and then retreated, remaining below the March 26 high. This morning’s analysis remains unchanged. The 3rd and final subwave, wave C, within the 4th-wave downward correction that began on March 21 continues. 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 5270s to the 5290s.

What does it mean? Under Elliott Wave Theory, the rise can be interpreted in two ways: Either it is the middle subwave (wave B) of larger C-wave decline, or the larger C wave ended at the March 26 low, 5263, completing the still larger 4th-wave correction, and a 5th-wave uptrend has begun.

For the moment I’m sticking with yesterday’s principal analysis — the B-wave-decline scenario. The decline lacks a clear five-wave pattern, as is normal for the C wave within a Zigzag pattern. The overnight rise fits nicely as a B wave within the C wave.

One caveat: A 4th-wave correction never moves the end of the preceding 1st wave — 5240.25 on March 18 in this case. If it does, then the analysis must be revised to eliminate the error. The C subwave low so far is 5263, so there’s not much downside left for an ongoing C-wave decline.

What are the alternatives? None beyond what was discussed above. Other ambiguities, without a doubt, will appear.

[S&P 500 E-mini futures at 3:30 p.m., 30-minute 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.
• Wave C{-8}, the last of three subwaves within wave 4{-7}, began on March 26 and is in its second subwave (wave B{-9}.
• Or, wave C{-8} may have ended at the March 26 low, ending wave 4{-7} and marking the start of an uptrend, wave 5{-7}.

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 27, 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.

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Based on a work at www.timbovee.com.