3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures remained during the session within the narrow overnight range. This morning’s Elliott Wave Theory analysis is unchanged: The 4th-wave downward correction that began on June 20 continues and is in its final subwave, wave C.

I’ve updated the chart.

9:35 a.m. New York time

A complicated week. Thursday, July 4, is a holiday in the United States, celebrating independence from the British Empire, and U.S.. markets will be closed. Markets the previous day, Wednesday, July 5, will close at 1 p.m. New York time, three hours earlier than usual.

The complexity is Friday’s release of the jobs report, which often will trigger a somewhat dramatic response from the markets. So, big news, maybe, and little time to prep for it.

What’s happening now? The S&P 500 E-mini futures remained in a narrow range after trading resumed overnight, from the 5540s down to the 5520s.

What does it mean? The movement is part of the final leg of a downward correction that began on June 20. The Elliott Wave Theory labeling on the chart has it as wave C, the final subwave of declining wave 4, a downward correction of smaller magnitude that, when complete, will trigger the start of a far larger 4th-wave downward correction.

The smaller 4th wave now underway is important because of its position within the fractal hierarchy of the chart. It is subwave within a series of uptrending 5th waves of increasing size. When the smaller 4th-wave is complete, those 5th waves will also be complete, as will be the still larger 3rd wave that began on February 21.

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., 80-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, declining 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, July 1, 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.