3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose higher during the session, reaching 5385.25 and then reversing a little.

The day session brought no change to the Elliott Wave Theory analysis. Wave C of the 4th-wave upward correction that began on July 11 continues.

A calming end to a dramatic week.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a turning point at 5372 overnight, thereafter falling to slightly below 5320.

What does it mean? Using Elliott Wave Theory, I’ve reworked the subwave labeling within the 4th-wave decline that began on July 11. The prior numbering had a 3rd subwave that was the shortest of the set, something disallowed by the rule sof Elliott Wave Theory.

The end result is unchanged from yesterday’s analysis: The 4th-wave upward correction that began on August 5 continues and is in its final subwave, rising wave C. The degree labeling of some of the waves have been raised by one degree from yesterday’s analysis.

See Thursday’s Trader’s Notebook to compare this altered analysis with the prior analysis.

[S&P 500 E-mini futures at 3:30 p.m., 55-minute bars, with volume]

What are the alternatives? It is possible that the rising C wave ended at the overnight high, 5372, ending the rising upward correction and beginning the final subwave within the final subwave within larger 4th-wave downward correction that began on July 16.

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}, which in turn is in its final subwave, uptrending wave 5{-8}.
• Within wave 5{-8}, wave 4{-9}, a downward correction, is in progress.
• Wave 4{-9} is in its final subwave, wave C{-10}.
• Wave C{-10} is in its next-to-the-last subwave, wave 4{-11}, which in turn is in its final subwave, wave C{-12}.

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, August 9, 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.