3:30 p.m. New York time

Half an hour before the opening bell. The S&P 500 futures fell during the session. In Elliott Wave Theory, it completed the 3rd subwave of a 2nd-wave upward correction that began on August 1, reaching the 78.67% Fibonacci retracement level, and then rode the 4th subwave, a downward correction, to just above the 38.2% retracement level.

9:35 a.m. New York time.

What’s happening now. The S&P 500 E-mini futures rose overnight, reaching into the 6420s, and then pulled back.

What does it mean? The rise, as Elliott Wave Theory sees it, is a subwave, wave 3, within a 2nd wave upward correction that began on August 1. That structure, in turn, is part of wave A of a larger 2nd-wave correction, this one declining, that began on July 31.

I’ve overlaid the price movements with a Fibonacci retracement ladder. It shows wave 2 as having retraced 78.6%

As an alternative, it’s possible to read the low of August 1 as being the end of an extremely rapid wave A within the downward correction that began on July 31, meaning that the rise that followed, beginning August 1, is wave B. The B wave is in its 3rd subwave, and if it were to begin a significant decline from this point, that would be verification of the alternative B-wave scenario.

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

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, August 7, 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.

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

License

Based on a work at www.timbovee.com.