3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures began the session in the 5860s and worked its way down close to 5800.

Elliott Wave Theory: The decline is a low-degree downward correction within the uptrending 3rd wave that began on May 9 from 5657.50. At this point the usual ambiguity kicks in. Was the correction completed by three subwaves of the initial decline from today’s peak, or was that decline simply wave A, with two more subwaves to come? Time will resolve the ambiguity.

9:35 a.m. New York time

What’s happening now. The S&P 500 E-mini futures gapped upward by 50 points when trading resumed overnight, which sounds impressive, although it’s only 0.9%. The rise continued, so far reaching into the 5860s as the opening bell approached.

What does it mean?  In Elliott Wave Theory analysis, the rise marks the start of the middle subwave, wave 3, within the uptrend wave 5 that began on May 7.

A 3rd wave is often the longest and most energetic of the five waves that form a trend, and this 3rd wave certainly matches that characterization so far.

Third waves have two ironclad rules that they follow. If a wave breaks one of the rules, then it’s not a 3rd wave but something else.

The first rule is that wave 3 must move beyond the endpoint of wave 1, which it did on Friday. The second rule is that wave is never shorter than both waves 1 and 5. It is already longer than wave 1. Wave 5 lies in wave 3’s future and so is a backward-looking indicator.

For this wave 3, a length a Fibonacci 1.618 times the length of wave 1, a peak around 6405 wouldn’t be atypical, although a more conservative estimate, based on prior pivot points, would place the peak at around 5900 or somewhat lower.

[S&P 500 E-mini futures at 3:30 p.m, 60-minute bars, with volume] 

Elliott Wave Theory wave labels. Each wave listed on the charts has two components: A wave number, and a subscript in curly brackets that place the wave’s position in the fractal strucutre in relationship to Intermediate degree. The present Intermediate degree, wave 5{0}, began its rise on February 11, 2016 from 1810.10 and is still underway.

The waves referred to on the chart are as follows.

Principal analysis: Upward correction wave 5{-2} is underway and within it is working through a nested series of initial subwaves, wave 1{-3} down to wave 1{-5}. One degree lower, rising wave 3{-6} is underway and is in its final subwave, wave 5{-7},

Within wave 5{-7}, uptrendng wave 5{-8} is in its middle stage, wave 3{-9}.

Waves Now Underway

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, 2/11/2016, 1810.10 (up)
• 3{-1} Minor, 3/23/2020, 2191.36 (up)
• 5{-2} Minute, 4/7/2025, 4832 (up)
• S&P 500 Futures
• 1{-3} Minuette, 4/7/2025, 4832 (up)
• 1{-4} Subminuette, 4/7/2025, 4832 (up)
• 1{-5} Micro, 4/7/2025, 4832 (up)
• 3{-6} Submicro, 4/21/2025, 4832 (up)

Reading the chart. Price movements — waves – – in Elliott Wave Theory 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, May 12, 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