9:30 a.m. New York time

What’s happening now? The S&P 500 E-mini futures initially declined slightly in overnight trading and then rose, to a high so far of 4545.75, within four points of Friday’s peak. The U.S. markets be closed today for the Labor Day holiday.

What does it mean? The price is in the very early stages of the middle portion of the rise that began on September 1, following the end of of a two-day correction. A rise above Friday’s high, 4549.50, will confirm this scenario.

What’s the alternative? The correction is still underway, having extended in a compound pattern.

What does Elliott wave theory say? By my principal analysis wave 5 of Subbitsy degree began on September 1, at the end of Subbitsy wave 4, which began on August 31. This is all happening within wave 5 of Bitsy degree, which began on August 26. Completion of Bitsy wave 5 will also mark the end of 5th waves of increasingly large degree, up three levels to wave 5 of Submicro degree, which in turn will mark the end of Micro wave 3, which began on May 19.

My alternative analysis considers wave 4 of Subbitsy degree to still be underway. Having completed its first corrective pattern, Subbitsy 4 under this scenario is now working through a second corrective pattern in a compound structure.

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, 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, September 6, 2021

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.

Alibaba Group Holding Ltd. (BABA)

Lot 2

Update 9/14/2021: I exited my bear call spread position on BABA 31 days before expiration, for a $0.99 debit per contract/share, a profit before fees of $138 per contract. Shares were trading at $162.31, down $8.61 from the entry level. The Implied Volatility Rank stood at 47.0% at exit, up 8.9 points from the entry level.

My decision to exit was based on the credit falling to greater than 50% of maximum potential profit.

Shares declined by 5.0% over 11 days for a -167% annual rate. The options position produced a 139.4% return for a 4,625% annual rate.

---

I have entered a short bear call spread on BABA, using options that trade for the last time 42 days hence, on October 15.

The premium is a $2.37 credit per contract share and the stock at the time of entry was priced at $170.92.

The implied volatility rank (IVR) stands at 38.1%.

Premium:	$2.37	Expire OTM
BABA-bear call spread	Strike	Odds	Delta
Calls
Long	200.00	90.0%	13
Break-even	187.37	83.0%	21
Short	185.00	76.0%	29

The premium is 31.6% of the width of the position’s wing.

The profit zone covers a 9.6% move to the upside.

The risk/reward ratio is 5.3:1, with maximum risk of $1,263 and maximum reward of $237 per contract.

By Tim Bovee, Portland, Oregon, September 3, 2021

Read More »

iShares China Large-Cap ETF (FXI)

Lot 2

Update 9/15/2021: I exited my bear call spread position on FXI 30 days before expiration, for a $0.28 debit per contract/share, a profit before fees of $54.00 per contract. Shares were trading at $40.06, down $1.44 from the entry level. 

The Implied Volatility Rank at exit was 27.1, down 13.9 points from the entry level.

My decision to exit was based on the debit on the contracts having reached about half of maximum potential profit.

Shares declined by 3.5% over 12 days for a 106% annual rate. The options position produced a 96.4% return for a 2,933% annual rate.

---

I have entered a short bear call spread on FXI, using options that trade for the last time 42 days hence, on October 15. The premium is a $0.55 credit per contract share and the stock at the time of entry was priced at $41.50.

The implied volatility rank (IVR) stands at 41.0%.

Premium:	$0.55	Expire OTM
FXI-bear call spread	Strike	Odds	Delta
Calls
Long	46.00	92.0%	10
Break-even	43.55	81.0%	21.5
Short	43.00	70.0%	33

The premium is 36.7% of the width of the position’s wing.

The profit zone covers a 4.9% move to the upside.

The risk/reward ratio is 4.5:1, with maximum risk of $245 and maximum reward of $55 per contract.

By Tim Bovee, Portland, Oregon, September 3, 2021

Read More »

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose from its low today of 4519.25, remaining below the overnight high of 4945.50. I’ve seen nothing to require a change in my analysis from this morning. I’ve updated the lower charts.

Holiday. Monday is a holiday in the United States — Labor Day — and markets will be closed. I anticipate that the S&P 500 E-mini futures will do some trading during market hours outside the U.S., and I shall post an analysis if there is any change on the chart.

10:10 a.m. New York time

My trades. I’ve entered short bear call options spreads on FXI and BABA.

9:35 a.m. New York time

What’s happening now? The rise of the S&P 500 E-mini futures that brought the price to a new high of 4549.50 at 8:30 a.m. was immediately interrupted by a rapid drop lasting 10 minutes and a partial recovery that took 28 minutes to complete, followed by a decline that so far has remained above the morning’s low.

What does it mean? Whether the drama was an artifact of trading algorithms or something more meaningful in the analysis remains to be seen. On the chart I’ve treated the drop and recovery as very low level movements within a larger uptrend that is still underway.

What’s the alternative? The peak can be seen as the end of the uptrend and the drop and partial recovery as the first tentative steps in what will become a far larger correction to the downside.

Charts. The upper chart is a close-up of the fluctuations of the E-mini futures at the time of Employment Situation Report was released. The lower chart is a combination showing a longer view of the futures, stretching back to mid-August, on the left, and a very long view stretching back to late 2019 on the right.

What does Elliott wave theory say? I’ve kept the principal analysis unchanged from yesterday: Wave 5 of Subbitsy degree within wave 5 of Bitsy degree, which are within a series of the 5th waves of increasing degree up to Submicro degree, whose parent, wave 3 of Micro degree, began on May 19.

Under the alternative analysis, the peak at 8:30 this morning was the end of wave 5 of Subbitsy degree, all the way up to the end of wave 3 of Micro degree. Under this scenario, wave 4 of Micro degree has begun.

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, 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, September 3, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 fell during the day and then paused in the small-degree initial steps in a 5th wave rise to the upside. No change in the analysis beyond the 9:57 a.m. update confirming that wave 5 of Subbitsy degree is underway. I’ve updated the chart, below.

9:57 a.m. New York time

New high. And the S&P 500 futures have reached a new high, 4544, confirming my principal analysis. Chart updated.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures completed the third leg of their correction from their August 31 high of 4542.25.

What does it mean? Most simple corrections have three legs — down, up, down for a downward correction. The next movement is a resumption of the trend, a rise in this case. Some corrections extend in compound patterns. In that case, the next upward movement is a separator that is followed by second corrective pattern.

My principal analysis, seen on the chart, treats the overnight rise as an early stage of the resumption of the uptrend that began on August 26. It will be confirmed by the price moving above 4542.25.

What’s the alternative? The resumed rise is a separator and will be followed by another corrective pattern, most likely with three subwaves.

What does Elliott wave theory say? Under my principal analysis, the overnight rise is the beginning of wave 5 of Subbitsy degree within a series of four 5th waves of increasingly higher degree, up to wave 5 of Submicro degree. The whole fractal series is within wave 3 of Micro degree. Wave 5 began within the completion of the wave 4 correction of Bitsy after yesterday’s closing bell.

Wave 5 of Subbitsy degree will push upward to new highs, exceeding the August 31 peak of 4542.25. The end of Subbitsy 5 will also be the end of wave 3 of Micro degree and the beginning of a 4th wave correction of the rise that began on May 19 at 4059.50.

Under the alternative analysis, the present rise is wave X of Subbitsy degree, a wave that separates two corrective patterns in a compound structure. Subbitsy wave X will end below the August 31 high of 4542.25.

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, 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, September 2, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued its zigging and zagging downward course, which by my principal analysis is the C wave within a correction, wave 4 of Subbitsy degree within an uptrending wave 5 of Bitsy degree. No change in the analysis. i’ve updated the chart, below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose slightly in overnight trading, remaining below Tuesday’s high of 4542.25 on the futures, 4537.36 on the index, and then began a decline.

What does it mean? The decline is the final leg of a shallow, low level correction that began on August 31. When it is done, the next movement will be a rise to new highs.

What’s the alternative? A rise above 4542.25 would mean that the correction had ended and the rise to new heights was underway.

What does Elliott wave theory say? The decline from the August 31 high is wave 4 of Subbitsy degree. Within that parent wave, the A and B waves are complete, and wave C to the downside is underway.

When wave C is complete, there are two options: Either the price will reverse as wave 5 of Subbitsy degree and move above the prior peak of 4542.25, or there will be an upward separator X wave within Subbitsy wave 4 that will remain below that peak. It will be followed by a second corrective pattern in a compound structure.

The end of Subbitsy wave 5 will cascade up four levels, also ending 5th waves at Bitsy, Subminuscule, Minuscule and Submicro degrees, which in turn will mark the end of wave 3 of Micro degree, an uptrend that began last May. Micro 3 will be followed by a 4th wave correction and then a push to new heights.

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, 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, September 1, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to work through the low-level correction that began with an overnight peak, completing wave A within wave 4 of Subbitsy degree, and beginning wave B. A 4th wave correction, like its 2nd wave counterpart, has three waves internally. However, 4th waves have a stronger tendency to extend in compound pattern that result in two or three correctives waves in a row within the parent wave. No change in the analysis. I’ve updated the chart, below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a new high of 4542.25 in overnight trading and then reversed to the downside. The new high on the index, at the opening bell, was 4537.36.

What does it mean? The peak marked the end of the low level rise that began on August 27 and the beginning of a correction that I expect to take a distinctly down-trending form; the preceding correction within the rise was rather shallow, and two corrections within a movement tend to alternate in form. The correction will be followed by a further push to the upside whose completion will be followed by a larger correction.

What’s the alternative? A swift reversal to the upside would mean that the rise from last Friday is still underway and the correction still lies in the future.

What does Elliott wave theory say? The rise from August 27 is wave 3 of Subitsy degree and the subsequent decline is Subitsy wave 4, all within wave 5 of Bitsy degree. Wave 2 of Subbitsy degree, which ended on August 27, was quite shallow: A Flat formation. Under the rule of alternation within Elliott wave analysis, wave 4 correction is expected to be steeper: A Zigzag formation.

The end of Subbitsy 4 will also be the end of Bitsy 5 and will cascade up three levels of 5th waves to mark the end of wave 5 of Submicro degree. That end point will also mark the end of wave 3 of MIcro degree, which began May 19 at 4059.50, settting off a 4th wave correction.

The same rule of alternation suggests that wave 4 of Micro degree will be a shallow Flat correction, since the preceding wave 2 was a steep Zigzag.

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, 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 31, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to rise until the midpoint of the trading session and then began a low-scale sideways movement. The pattern lends credence to my principal analysis of this morning: The present wave is the 3rd of Subbitsy degree, and I would consider the new sideways pattern as a 4th wave internal to Subbitsy 3. No change in the analysis. I’ve updated the chart.

9:50 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose to a new high in the minutes before the opening bell.

What does it mean? The low-level uptrend that began August 26 is still underway and is now in the middle portion of its rise. Its completion will be followed by a shallow correction and then a further rise to new heights.

What’s the alternative? It’s possible that the overnight sideways movement was the correction, and the further rise is the final portion of the uptrend from last week. It’s a question of what level we’re counting, and I discuss it further in the Elliott wave theory section, below.

What does Elliott wave theory say? The rise from August 26 is wave 5 of Bitsy degree. It’s completion will signal the end of a series of 5th waves of higher degree, up three levels to Submicro degree. The parent, wave 3 of Micro degree, began May 19 at 4059.50.

How far along is Bitsy wave 5? By my principal count, internally it is in wave 3 of Subbitsy degree, which will be followed by a 4th wave correction and then a 5th wave push to new highs.

But what to make of the sideways movement overnight? I’m treating it as a 4th wave within Subitsy wave 3, a level so low I don’t even have a name for it. Using the subscripts method, Subitsy on the chart is {-10} and the unnamed lower wave is {-11}.

It’s possible, however, that what I’m calling the Subitsy, {-10}, degree is really the nameless {-11}, and the sideways stretch overnight was a degree lower, at {-12}. And that is my alternative analysis. Time will unravel the mystery of which analysis is correct.

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, 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 30, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has continued to rise during the trading day, reaching 4509.25 so far on the futures, 4512.45 on the index. No change in the revised analysis. I’ve updated the uppermost of the two charts.

10:45 a.m. New York time

Revised analysis. The S&P 500 rose sharply to new highs as Federal Reserve Chairman Jerome Powell spoke about the Fed’s policies at the online-this-year Jackson Hole Symposium. The rise means that the low-level correction discussed in this morning’s analysis ended at yesterday’s low and the push to higher highs, also discussed earlier, is now underway.

The alternative analysis would treat the quick rise as a wave separating two corrective patterns in a compounds correction. With the present evidence, I can’t choose between the two. If the price quickly retreats, then the separator wave scenario will become the principal analysis.

In terms of Elliott wave analysis, yesterday’s low marked the end of wave C of Subbitsy degree within wave 4 of Bitsy degree, and the subsequent rise is wave 5 of Bitsy degree, whose whose completion will also mark the end of two 5th waves of increasingly higher degree, Minuscule and Submicro, and of their parent, wave 3 of Micro degree.

Here’s the new chart. I’ve retained the former, now out-dated chart below as reference.

10 a.m. New York time

What’s happening now? The low level correction that began August 24 on the S&P 500 E-mini futures completed its first downward wave in overnight trading and is now in its upward second wave.

What does it mean? The final wave of the three-wave pattern will be a downward movement. The end of the correction will be followed by a push to new highs.

What’s the alternative? Corrections tend to come in groups of three waves internally, although often they extend in compound patterns. So whether this three wave pattern will be the end of the correction is still an open question. If it extends, then the final wave of the first pattern will be followed by a separator wave to the upside, and then a second corrective pattern, most likely also of three waves internally.

What does Elliott wave theory say? The low overnight marked the end of wave A of Subbitsy degree within wave 4 of Bitsy degree, a correction within wave 5 of Subminuscule degree. Bitsy wave 4 will be followed by a 5th wave of the same degree, whose completion will also mark the end of two 5th waves of increasingly higher degree, Minuscule and Submicro, and of their parent, wave 3 of Micro degree. At the lowest level, Subbitsy wave B is now underway and will be followed by a downward movement, Subbitsy wave C.

The question is what will happen at the end of Subbitsy wave C. If the correction proves to be a simple three-wave pattern, then the end of C will mark the beginning of Bitsy wave 5’s journey to new highs. If the correction proves to be a compound pattern, then Subbitsy C will be followed by a separator wave, labelled X and then another corrective pattern of Subbitsy degree, most likely a Zigzag or a Flat, although a triangle of some sort is also possible

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, 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 27, 2021

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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 declined during the day in a pattern consistent with my alternative analysis, which has been promoted to principal analysis status. Yesterday’s high of 4498 was the peak of wave 3 of Bitsy degree, and Wave 4 of Bitsy degree is tracing a counter-trend correction. Here’s a new chart with the revised analysis.

9:45 a.m. New York time

What’s happening now? The S&P 500 E-mini futures dipped slightly and then rose in overnight trading, remaining below yesterday’s high, 4498.

What does it mean? The small decline will be followed by new highs in the final leg of the rise that began on August 19.

What’s the alternative? A sideways correction that began on August 23 is still underway, pushing off the rise to new highs until later in the future.

What does Elliott wave theory say? It’s hard to choose between the two possible scenarios. I consider them to be of equal likelihood.

Under my principal analysis, wave 5 of Bitsy degree began at yesterday’s low and is presently in a very low-level wave 2 correction internally.

Under my alternative analysis, wave 4 of Bitsy degree is still underway.

See yesterday’s S&P 500 analysis for a detailed discussion of the greater implications of both scenarios.

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, 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 26, 2021

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.