3:30 p.m. New York time
Half an hour before the closing bell. The S&P 500 E-mini futures fell sharply Friday, extending the decline that began after the October 8 peak at 7897.50. The price plunged into the 7690s, breaking below the October 1 low at 7711 and prompting a major revision of the Elliott Wave analysis.
The Elliott Wave count has changed. Rising wave D{-5}, which began March 30 at 7353.25, ended October 8 at 7897.50. Falling wave E{-5}, the final leg of the expanding triangle that has been underway since October 29, 2025, has begun.
The expanding triangle is the form taken by declining wave 4{-4}, a correction within the larger upward market structure. It consists of five legs, labeled A{-5} through E{-5}, with alternating downward and upward movements. Wave D{-5} was the fourth leg, rising toward the upper end of the pattern. Wave E{-5} is the fifth and final leg, moving downward.
Until Friday, our working count placed the market within the final upward subdivisions of D{-5}. Under that interpretation, the declines following October 8 were corrections within an unfinished rising impulse. Further upward movement would eventually have completed D{-5}.
That interpretation became increasingly difficult to reconcile with the price movement.
The October 8 peak at 7897.50 was followed by a series of declines and recoveries. The recoveries failed to establish a new high, while the declines carried progressively lower. Friday’s sharp fall below 7711, the October 1 low that had been labeled wave 4{-7} within the previous rising count, seriously undermined that structure.
The break below 7711 was not, by itself, a formal violation of an Elliott Wave rule. Its importance was structural: The magnitude and persistence of the decline, combined with the failure to establish a new high, no longer fit convincingly with the expectation that the market was completing the final stages of D{-5}.
The simpler interpretation is that the entire rise ended October 8 and that the subsequent decline belongs to a new wave of higher degree.
We have therefore moved the end of D{-5} to 7897.50 and identified the decline from that price as the opening movement of E{-5}.
The revision changes the significance of the current decline.
Under the previous count, the downward movement was a relatively small correction embedded within a larger rising wave. Its completion would have been followed by additional upward movement toward the end of D{-5}.
Under the revised count, the decline is part of E{-5}, a wave of substantially greater degree. Its role within the Elliott Wave structure is to complete the expanding triangle that began nearly a year ago.
An expanding triangle ordinarily consists of five corrective waves, each composed of three principal subdivisions. Wave E{-5} should therefore develop as a corrective decline rather than necessarily as a continuous five-wave impulse.
This distinction matters. A substantial upward recovery during E{-5} would not necessarily mean that the decline had ended. Such recoveries are normal within corrective structures, and we should expect the market to alternate between falling and rising movements as E{-5} develops.
The duration and eventual depth of E{-5} remain to be established. The triangle’s lower boundary will be an important reference as the wave progresses, but we do not yet have sufficient evidence to identify its final low.
The broader implication is that wave 4{-4} may be approaching its final stage. Under the Elliott Wave model, completion of the triangle would eventually be followed by rising wave 5{-4}, resuming the larger upward structure.
That prospective rise, however, belongs to the future. Our present analytical task is to follow the developing subdivisions of E{-5} and determine when the downward correction has completed its work.
Decision Points
The most important price in the revised analysis is 7897.50, the October 8 high.
As long as the market remains below that level, our working count identifies E{-5} as underway. Intermediate rallies can occur without changing that interpretation.
If /ES reverses direction and rises above 7897.50 before E{-5} is completed, however, the present identification of that high as the end of D{-5} will no longer be valid.
A new high would mean that the October 8 peak was not the end of D{-5} after all. We would need to reconsider whether D{-5} remained underway, with the present decline representing a corrective subdivision within its unfinished upward structure.
Such a development would not necessarily invalidate the expanding triangle itself. It would change our understanding of the fourth leg’s completion and postpone the beginning of the final declining leg.
There is an additional Elliott Wave consideration. In a conventional expanding triangle, wave E must remain consistent with the triangle’s required wave relationships and boundaries. The developing decline will therefore need to be evaluated against the full structure, not merely against the October 8 high.
For now, the evidence favors an E{-5} decline in progress.
The immediate task is to identify the smaller waves forming within that decline. Their turning points will provide the next evidence about the market’s direction, while 7897.50 remains the principal invalidation level for the new count.
9:35 a.m. New York time
What’s happening now? The S&P 500 E-mini futures rose overnight, reaching a high of 7714, and then took back part of the gain.
What does it mean? Elliott Wave Theory, when applied, sees the rise as a small counter-trend movement within falling wave A{-6}, which in turn is a subwave of falling wave E{-5}. The structure is encompassed by wave 4{-4}, a downward correction that has taken the form of an expanding triangle. Wave 4{-4} began on October 29, 2025.
Decision Points. A renewed decline below Monday’s low in the 7650s would strengthen the case that wave A{-6} is continuing downward. A rise above the overnight high of 7714 would extend the counter-trend movement but would not by itself alter the larger bearish count. A move above 7838.50, the August 13 peak, would invalidate the present placement of the start of wave E{-5}.
The Chart. The chart focuses on the current declining wave E{-5} and the rising wave that preceded it, wave D{-5}.
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)
- 1{-2} Minute, 7/31/2025, 6468.50 (down)
- S&P 500 E-mini futures
- 5{-3} Minuette 8/1/2025, 6239.50 (up)
- 4{-4} Subminuette 10/29/2025, 6953.75 (down)
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 pageAnalytical Methods for a rundown on where to go for information on Elliott Wave analysis.
By Tim Bovee, Portland, Oregon, August 25, 2026
Disclaimer
Tim Bovee, Private Trader tracks the analysis and trades of a private trader managing his own accounts. The content reflects my interpretation of market structure, including Elliott Wave Theory and related tools.
Nothing in this blog constitutes a recommendation to buy or sell stocks, options, or any other financial instrument, or to pursue any particular strategy. The purpose of this blog is education and entertainment.
No trader is ever 100 percent successful. Trading in stock and options markets involves risk and uncertainty. Each trader must make decisions for his or her own account and accept full responsibility for the outcomes.
Charts and tools are used to support my personal analysis. Any data displayed is illustrative of that analytical process and is not presented as a source of market data for redistribution.
All content on Tim Bovee, Private Trader byTimothy K. Boveeis licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
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