3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during the session, from 5900.75 at the opening bell, down to the 5830s. The price movement was too shallow to reconcile the uncertain Elliott Wave Theory analyses of the past several days.

So, the conundrum is unchanged:

• The 4th-wave downward correction that began on October 17 continues.
• Or the 4th-wave downward correction ended on October 23 and a 5th-wave uptrend has begun.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from the 5840s to the 5860s.

What does it mean? The chart has spent the week bottom fishing. In Elliott Wave Theory terminology, the 4th-wave downward correction that began on October 17 has reached a point where any lower low potentially means the correction is complete. The most recent lower low is 5801, on October 23.

Until there’s a breakout to the upside, it will be impossible to understand for sure whether wave 4 is continuing or complete. If continuing the price will fall below 5801. If complete, the price will rise, approaching and most likely exceeding the wave 4 starting point, 5927.25.

In my decades working with Elliott Wave Theory, I’ve found that it’s best to acknowledge that which I don’t know, and can’t know given the evidence.

On the chart, I’ve hedged my bet by not selecting one scenario or the other as the principal analysis but instead marking both possibilities as alternative analyses having equal likelihood, as was also the case yesterday.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

What are the alternatives? As described above, there are two alternative analyses, without a clear principal analysis.

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

Principal Analysis:

• None.

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 25, 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.