3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures resumed their rise during the session, reaching into the 5860s.

Elliott Wave Theory: The uptrending 5th wave that began on October 2 completed its 4th subwave, a downward correction, during the session and began its rising 5th and final subwave.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined overnight, reaching into the 5810s and then rising into the 5890s with the release of the Producer Price Index an hour before the opening bell.

What does it mean? The net sideways movement within the narrow range suggests, in Elliott Wave Theory, that the 4th-wave downward correction that began on October 9 from 5846.50 continues. The correction is the next-to-the-last subwave within an uptrending 5th-wave that began on October 2. That uptrending wave is a small part of a larger uptrending 5th wave that began on September 6 from 5394.

On the chart. Each wave on the chart is labeled with the wave number and a subscript in curly brackets indicating the wave’s distance in degrees from the current Intermediate degree wave within the fractal. Presently underway at the Intermediate degree is wave 5{0}, which began in December 2018.

What’s next? The smallest wave tracked on the present chart, the downward correction, wave 4{-10}, will be followed by a wave 5{-10}, an uptrending motive wave.

Fifth waves are famed for being quirky. Usually, they move beyond the end of the preceding 3rd wave, 5846.50 at this point. But sometimes the 5th-wave falls short, a condition known as truncation. Or sometimes continues longer in time and distance than would seem reasonable, a continues known as extension. There’s no way to tell at this point what sort of path wave 5{-10} will follow.

What we can know is that when wave 5{-10} reaches its end, it will also be the end of its parent wave 5{-9}, and its grandparet wave, 5{-8}, the latter having begun on September 9.

Wave 3{-7}, one degree larger, will also reach its end with the end of wave 5{-10}. Wave 3{-7} began on August 7 from 5182.

A 4th-wave downward correction, three degrees larger than the small downward correction now underway, wave 4{-10}, will follow.

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

What are the alternatives? None at present. I’m quite certain that ambiguities will present themselves, as they rarely fail to do.

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 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its final; subwave, uptrending wave 5{-8}.
• Wave 5{-8} is in its final subwave, wave 5{-9}, which is in its next-to-the-last subwave, wave 4{-10}.

Long-term Waves.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

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 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its final; subwave, uptrending wave 5{-8}.
• Wave 5{-8} is in its final subwave, wave 5{-9}, which is in its next-to-the-last subwave, wave 4{-10}.

Long-term Waves.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures
• 5{-1} Minor, 10/27/2023, 4127.25 (up)
• 3{-2} Minute, 10/27/23, 4127.75 (up)
• 3{-3} Minuette, 10/27/23, 4127.75 (up)
• 5{-4} Subminuette, 4/18/2024, 4963.50 (up)
• 5{-5} Micro, 8/5/2024, 5120 (up)
• 1{-6} Submicro, 8/5/2024, 5120 (up)
• 3{-7} Minuscule, 8/7/2024, 5182 (up)
• 5{-8} (unnamed), 9/6/2024, 5394 (up)

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, October 11, 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.