3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures late in the session suddenly dropped, from within $2 of the $6100 level down into the 6070s in 15 minutes.

The decline broke from from the sideways tangle that has been the pattern since February 5 and, in Elliott Wave Theory terminology, increases the likelihood that the peak of the tangle, 6106.25, was the end of rising wave B within the present correction and the start of declining wave C. That peak was reached right at the opening bell this morning.

I’m not yet ready to mark the chart to declare that wave C is underway. I’d like to see a bit more decline before doing so. Also, AMZN publishes earnings after the close, and that’s often a market-mover. So I’ll wait until tomorrow morning before reaching a decision on the matter.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, reaching 6105, and then declined into the 6080s.

What does it mean? The price movement was a scribble on the chart, of little significance. For the Elliott Wave Theory analysis, the ongoing question is: Has the rising B-wave ended? The wave is the middle subwave of a small downward correction that began on January 31.

The B wave — wave B{-19} on the chart — has completed two of its three subwaves and could complete the final subwave at any time, ending the small correction, and also the final wave of a larger correction — one degree higher, which would end the middle subwave, wave B, of a still larger correction.

The chart at this point is a tangle of corrections. See the wave lists, below, for the full structure.

[S&P 500 E-mini futures at 3:30 p.m., 90-minute bars, with volume]

What are the alternatives? The question here is: Are the degrees correct? I think so, but it hasn’t been tested yet.

What does Elliott wave theory say? Here are the waves that underlie the analyses, updated with today’s reanalysis.

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, 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 initial subwave, wave 1{-9}, as are waves 1{-10}, 1{-11}, 1{-12}, and 1{-13}.
• Wave 1{-14}, an upward correction and is in its first subwave, wave 3{-15}.
• Wave 3{-15} is in its second subwave, rising wave 4{-16}, an upward correction
• Wave 4{-16} is in its middle subwave, descending wave B{-17}, which is in its middle subwave, rising wave B{-18}
• Rising wave B{-19}, the middle subwave of wave B{-18}, is nearing its end. It appears to be in its third subwave, wave C{-20}.

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. (Updated with today’s reanalysis.)

• 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), 1/13/2025, 5809.25 (down)
• 3{-15} (unnamed), 1/13/2025, 5809.25 (down)
• 4{-16} (unnamed), 1/13/2025, 5809.25 (up)
• B{-17} (unnamed), 1/24/2025, 6162.25 (down)
• C{-18} (unnamed), 1/31/2025, 6147.75 (down)
• B{-18} (unnamed), 1/27/2025, 5948 (up)
• B{-19} (unnamed), 2/2/2025, 5935.5 (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, February 6, 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.