3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures recovered part of the overnight decline and then fell a bit further during the session. The range for both combined is from 5893 (overnight) to 5845.50 (session).

Elliott Wave Theory: The 4th-wave downward correction that began on October 17 continues. Within wave 4, the middle subwave, rising wave B, has completed three still smaller subwaves, as i the case within B waves. The decline suggests that declining wave C has begun.

I’ve updated the chart to conform.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell overnight, from the 5890s to the 5860s.

What does it mean? The 4th-wave downward correction that began on October 17 continues to work through wave B, the correction’s middle subwave, which began on October 23 from 5801, according to Elliott Wave Theory analysis.

The correction has taken the form of a Zigzag, signaled by wave A having five subwaves.

Wave B, a rising wave, will remain above the starting point of wave A, at 5927.25. The B wave will be followed by a declining C wave that, if typical, will be about the same length as the preceding A wave, 126.25.

If the B-wave high so far, 5871.25, were to be the B-wave’s ending point, then wave C would carry the price down to 5745. No guarantee of course, that wave B will end at 5871.25 or that the C wave will be precisely as long as wave A. Those are tendencies, not rules.

Wherever it lands, the end of wave C will be the end of the downward correction if, as is typical, it contains a single corrective pattern. If instead it turns out to be a complex correction, then wave 4 will contain two or three corrective patterns, linked together with connecting waves.

In either case, the 4th-wave downward correction will be followed by a 5th-wave uptrend.

[S&P 500 E-mini futures at 3:30 p.m., 100-minute bars, with volume]

What are the alternatives? It still remains possible, although less likely, that wave 4 ended at the October 23 low and that a 5th-wave uptrend has begun.

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, corrective wave 4{-10}, which has completed its first subwave, wave A{-11}

Alternative Analysis:

• 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)
• 4{-10} (unnamed), 10/17/2024, 5927.25 (down)

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 30, 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.

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Based on a work at www.timbovee.com.