3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose during the session from the 5840s to slightly above 5900 and began to drift downward. The downtrending 5th wave that began on January 6 from 6068.25 continues and in in its middle subwave, wave 3.

1:25 p.m. New York time

Reanalysis of the chart from mid-December to mid-January. That sort of large reanalysis is what I said would happen if the price dropped below 5866, the end of the previous 1st wave. The price dropped below that level during the middle of session. Here’s the result.

What has changed? The problem was a rule that says 4th waves can’t move beyond the end of the 1st wave that came before it. When that rule was broken, as it was today, then the solution is to redo the count so as to get rid of the 4th wave.

Each wave on the chart has a wave number or letter, followed by a subscript in curly brackets containing a number showing the wave’s distance in degrees from Intermediate degree within the fractal structure of the chart. A positive number is degrees larger then the Intermediate degree. The present Intermediate degree, wave 5{0}, began in December 2018/

I achieved that solution by pushing the 4th-wave upward correction up a degree down, so that what had been the A{-15} wave, the correction’s first subwave, became the entire wave 4{-15} correction, ending on January 6 at 6008.25.

That change then transformed the ensuing decline, which had been wave B {-15}, the middle subwave of the correction, into wave 5{-14}, the downtrending 5th wave that follows the correction.

Problem solved. The implication of the change is that we a longer immediately ahead than we when the the old version, the B wave. For my trades, I shall consider it to be a strengthening of the bearish indicator that has been with us since the January 6 peak.

I have retained this morning’s chart for comparison with the revised chart, which is here:

[S&P 500 E-mini futures at 3:30 p.m., 45-minute bars, with volume]

---

The analysis and chart below the line are part of this morning’s analysis, which has been replaced by the new principal analysis described above. The wave lists, below, have been be updated with the analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell sharply, from the 5950s to the 5880s, after the Bureau of Labor Statistics reported a 256,000 increase in jobs. Unemployment held steady at 4.1%

What does it mean? The decline knocked out yesterday’s principal Elliott Wave Theory analysis, instead confirming the alternative analysis: The middle subwave, declining wave B, within a 4th-wave upward correction that began on January 2.

Wave B will be followed by a rising C wave, the final wave within the 4th-wave correction. When the C wave is compete, bringing the correctian to an end, A downtrending 5th wave will begin.

Under the rules of Elliott Wave Theory, the B wave cannot move below the start of the preceding wave 1, the declining wave that preceded the upward correction. That 1st wave ended on December 20, 2024, at 5866. If the price should drop that low while the correction is undeerway, then the entire analysis since December 16, 2024 gets tossed and a new analysis takes its place.

[Outdated: S&P 500 E-mini futures at 9:35 a.m., 45-minute bars, with volume]

What are the alternatives?

The B subwave problem that plagued both of yesterday’s possibilities, principal and alternative, continues. B waves in either of the most common corrective patterns — Zigzag and Flat — have three subwaves. The subwaves I’m seeing on the chart number five.

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

Principal Analysis:

Updated with the 1:25 p.m. New York timeanalysis.

• .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, which is uptrending wave A{-8}, if wave 4{-7} is a Flat structure, with three subwaves, or wave 1{-8} if it is a Zigzag structure, with five subwaves. (I’ll assume Flat as the list continues, since that’s more common within 4th waves)
• Wave A{-8} is in its intial subwave, wave 1{-9}, as are waves 1{-10}, 1{-11}, 1{-12}, 1{-13} and 1{-14}.
• Wave 5{-16} is presently underway and is declining.

Long-term Waves.

Updated with the 1:25 p.m. New York time analysis.

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)
• 1{-14} (unnamed), 12/16/2024, 6163.75 (down)
• 5{-15} (unnamed), 1/6/2025, 6068.25 (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, January 10, 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.