3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fluctuated between the 5550s and the 5530s during the session, going nowhere. This morning’s Elliott Wave Theory analysis is unchanged: A 4th wave downward correction within a 5th-wave uptrend that began on June 11 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 from the 5510s to the 5540s overnight.

What does it mean? The Elliott Wave Theory analysis remans unchanged. A 4th-wave downward correction within a 5th-wave uptrend continues. The correction is in its final segment, wave C.

When wave C is complete, it will also be the end of the correction and the beginning of the final subwave of the 5th-wave uptrend — wave 5.

The 5th-wave uptrend began on June 11. When it is complete, it will also be the end of two 5th waves of increasing size within the fractal structure of the chart, and of a still larger 3rd wave that began on February 21.

What comes next. A 4th-wave downward correction will follow, significantly larger than the small 4th wave now underway.

How large? The starting price of the 3rd wave that began on February 21 was 4959. A 4th wave typically ends somewhere within range covered by the 4th subwave within the 3rd wave. That gives a typical endpoint of the future larger 4th wave between 4959 and 5253.50.

Note that the typical endpoint is a tendency, not a firm rule.

What are the alternatives? There may be a 1st wave on the chart, between wave 5{-6} and 5{-5}. If that’s the proper count, then it would delay the onset or the 4th-wave downward correction, wave 4{-4}. See the June 18 Trader’s Notebook for a more detailed discussion.

[S&P 500 E-mini futures at 3:30 p.m., 70-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 a wave of Intermediate degree that began in December 2018.
• 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 wave 5{-5}.
• Wave 5{-6} is underway and is in its final subwave, uptrending wave 5{-7} and its subwave, downtrending wave 4{-8}, a corrective wave.
• Wave 4{-8} is in its final subwave, wave C{-9}.

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, June 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.

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.