3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose during the session, reaching into the 5990s.

The extent of the rise since January 2 suggests that a 4th-wave upward correction has begun. It seems slightly odd to have the impulse wave declining and the corrective wave rising, but that’s where we have been since the peak on December 16, which marked the end of a very deep series of 5th waves ending a large 3rd wave and beginning a large 4th-wave downward correction that contains a large number of impulse subwaves, each nested within the next larger wave.

How does that work? Remember that the A wave of a correction contains five or three subwaves, depending upon whether the structure is a Zigzag or a Flat. If a Zigzag, then those A wave contains a series of impulse waves, a five-wave structure trending upward, and each of those subwaves contains smaller subwave structure — five waves, three of which contain even smaller subwave structures.

Bottom line: It will take some time for us all, myself included, to become accustomed to the reality of this major-downturn.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded sideways overnight, for the most part fluctuating between the 5920s and the 5950s.

What does it mean? Elliott Wave Theory analysis sees yesterday’s switch from a rise to a sideways trend as being the start a corrective subwave as the downtrending 3rd wave that began on December 26, 2024 has reached its end.

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

What are the alternatives? There are ambiguities within the 1st-wave’s subwaves but the larger wave count is clear.

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 4{-14} is presently underway and is rising

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)
• 4[-14} (unnamed), 1/2/2024, 5874.75 (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, January 3, 2025

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.