3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during the session, from 5870 down into the 5820s, and then took back some of the loss.

The price remained above the October 23 low, 5801, leaving the two alternative analyses from this morning intact, with no reason to chose one over the other as the principal analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell overnight, remaining above yesterday’s session low, 5801.

What does it mean? In terms of Elliott Wave Theory, the analysis is stuck precisely in the same dilemma as a was prior to yesterday’s opening bell:

• A 4th-wave downward correction began on October 17.
• Did it end with the most recent low, 5801?
• Or is the downward correction still underway.

The downward movement since October 17 can be seen as having three clear sub waves: Waves A, B and C within wave 4, meaning the 4th wave may have ended and uptrending wave 5 has begun.. Or the decline can be seen as having five subwaves, as is by definition wave A of a Zigzag correction, meaning wave 4 continues.

Elliott Wave Theory is first and foremost a pattern recognition system, and the problem with pattern recognition is that the patterns are sometimes ambiguous. Time always resolves the ambiguities, but getting there can produce some interesting times.

I’ve marked the chart in a way to show both both possibilities, leaving the principal analysis uncertain.

[S&P 500 E-mini futures at 3:30 p.m., 115-minute bars, with volume]

What are the alternatives? There are two alternative analyses, without a clear principal analysis.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Alternative Analysis #1:

• 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, corrective wave 4{-10}.

Alternative Analysis #2:

• Wave 5{-8} is in its final subwave, wave 5{-9}, which is in its final subwave, rising wave 5{-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)
• 5{-9} (unnamed), 10/2/2024, 5724 (up)
• Two alternatives:
  • 4{-10} (unnamed), 10/17/2024, 5927.25 (down), or…
  • 5{-10} unnamed, 10/23/2024, 5801 (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 24, 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.