3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures continued to rise during the session, reaching into the 6050s.

Elliott Wave Theory: The 2nd wave upward correction that began overnight continues.

9:35 a.m. New York time (updated at 11:20 a.m.)

What’s happening now? The S&P 500 E-mini futures reached a low 5866 overnight and then reversed and returned to the 5900s.

What does it mean? The movements of the last few days, under the rules of Elliott Wave Theory, have prompted a reanalysis of the chart beginning with the wave that began on December 13 and ended December 16.

On the chart each wave has a number and a subscript in curly brackets showing the wave’s distance from Intermediate degree in the fractal structure of the chart. The present Intermediate degree is wave 5{0}, which began in December 2019.

The wave that began on December 13 under the prior analysis had been labeled an initial subwave — wave 1{-14} within uptrending wave 5{-13}. That analysis was no longer defensible after the 2nd-wave downward correction that followed fell below the start of that subwave, wave 1{-14}, something forbidden to 2nd waves under the rules of Elliott Wave Analysis.

Under the new analysis, I’ve renumbered the former wave wave 1{-14} as wave 5{-13}. As I’ve mentioned in previous analyses, when wave 5{-13} ends, as it now has, it is also the end for a series of larger 5th waves, travelling up the fractal structue from wave 5{-12} to wave 5{-8}, and up one more degree, wave 3{-7}, which began on August 7 from 5182.

What follows is wave 4{-7}, a downward correction of larger proportions than we’ve seen for the past few months.

[S&P 500 E-mini futures at 11:20 a.m., 55-minute bars, with volume]

What are the alternatives? I suspect there are ambiguities, but it will require more analysis to understand them.

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 4{-7} is in its initial; subwave, uptrending wave A{-8}.
• Wave 1{-8} is in its initial subwave, wave 1{-9}, which is in its final subwave, uptrending wave 5{-10}.
• Wave 1{-10} is in its initial subwave, as are waves 1{-11}, 1{-12}, and 1{-13}.
• Wave 2{-14} appears to be under and is in its initial subwave, wave A{-15}.

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)
• 4{-7} Minuscule, 12/16/2024, 6163.75 (down)
• A{-8} (unnamed), 12/16/2024, 6163.75 (down)
• 1{-9} (unnamed), 12/16/2024, 6163.75 (down)
• 1{-10} (unnamed), 12/16/2024, 6163.75 (down)
• 1{-11} (unnamed), 12/16/2024, 6163.75 (down)
• 1{-12} (unnamed), 12/16/2024, 6163.75 (down)
• 1{-13} (unnamed), 12/16/2024, 6163.75 (down)
• 2[-14} (unnamed), 12/20/2024, 5866 (up)
• A{-15} (unnamed), 12/20/2024, 5866 (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, December 20, 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.