5/9 – 3:10 p.m. New York time
No trades today. SPY has peaked so far at 269.97. A move above 271.30, the April 18 high, could cause me to rethink my Elliott wave analysis.
5/9 – 10:25 a.m. New York time
SPY continues its non-trending sideways correction within the frame of a larger downtrend. No trade in sight this morning.
By Tim Bovee, Portland, Oregon, May 9, 2018
5/8 – 3:10 p.m. New York time
My next anticipated trade is to re-enter a shares position on SPXU, the inverse S&P 500 fund, when the Fisher Transform signals a downtrend on the daily chart. It remains in uptrend mode, so no trades today.
5/8 – 10:30 a.m. New York time
I continue to operate on two bearish tracks.
The first, managing options plays on SPY, relies on Elliott wave analysis for entry/exit signals with the Fisher transform serving as a granular signal for when to make the trade. The positions expire in mid-June. The Elliott wave analysis is ambiguous but suggests a sideways correction within a larger downtrend.
The second, re-entry into a shares trade on the inverse S&P 500 fund SPXU, relies primarily on the Fisher transform for entry/exit signals within a major trend identified by Elliott wave analysis. The Fisher is presently showing an uptrend signal, so I am out of the shares position.
By Tim Bovee, Portland, Oregon, May 8, 2018
5/7 – 3:20 p.m. New York time
I exited my shares position on SPXU based on the Fisher Transform but retained my options-based bear position on SPY based on Elliott wave analysis.
5/7 – 1:30 p.m. New York time
I’ve updated my SPXU Analysis with results.
5/7 – 10:20 a.m. New York time
I have exited my shares position on SPXU for a loss, based on the Fisher Transform remaining in an uptrending posture. SPXU profits in a downtrend in the S&P 500. (See Friday’s Live post for a discussion.)
The chart this morning remains consistent with my analysis and I plan no action this morning on my bear positions on SPY using options. (See Thursday’s Live post for a chart discussion.)
By Tim Bovee, Portland, Oregon, May 7, 2018
Price reports dominate economic statistics this week: The producer price index (final demand) on Wednesday and the consumer price index on Thursday, each at 8:30 a.m. New York time
In Fedworld, Chairman Jerome Powell takes part in a panel discussion at a conference in Zurich sponsored by the Swiss National Bank and the International Monetary Fund, on Tuesday at 3:15 a.m. New York time (9:15 a.m. Zurich time). His topic: Monetary policy influences on global financial conditions and international capital flows. The event will be streamed live here.
5/4 – 3:50 p.m. New York time
The Fisher Transform on the SPY 10-minute chart remains downtrending, although the daily chart is uptrending. Without unanimity, I won’t exit the SPXL shares position now, but shall wait until Monday to evaluate my next action. No trades today.
5/4 – 3:20 p.m. New York time
The Fisher Transform on SPY, which tracks the S&P 500, has moved to uptrending on the daily chart, and yet is downtrending on the 10-minute chart. I unanimity between the two levels before acting.
If the 10-day bar movs to uptrending, then I shall exit my shares position on SPXU, a leveraged inverse ETF tracking the S&P 500 and replace it with SPXL, a non-inverse leveraged S&P 500 fund. Otherwise I shall retain my SPXU position.
5/4 – 11:45 a.m. New York time
SPY remains in downtrend mode on the Fisher Transform, and there has been no change in the Elliott wave analysis posted on Thursday.
By Tim Bovee, Portland, Oregon, May 4, 2018
ProShares UltraPro Short S&P500 (SPXU)
Update 5/7/2018: The Fisher Transform moved to uptrending on the SPY daily chart, and I exited my bear position on the SPXU inverse fund for a loss. I shall re-enter SPXU when the Fisher again signals a downtrend.
I have entered a bull position on SPXU using shares. SPXU is a short fund — it attempts to move the opposite of the S&P 500 — and a leveraged fund — it attempts to produce triple the return (or loss) for any given price move.
I entered the position because the daily chart Fisher Transform on SPXU is uptrending, and my Elliott wave analysis shows the S&P 500 in a third wave to the downside at multiple degrees. (See the SPY chart discussion in the May 3 Live post.)
So, a declining SPY equates to a rising SPXU.
The trade:
| sym | entry | exit | result (%) | annualized (%) | entry date | exit date |
| SPXU | 11.24 | 10.58 | -5.9% | -535.8% | 5/3 | 5/7 |
For my SPY options positions I’m relying on Elliott wave analysis to tell me that it’s time to get out. For SPXU, I’m eliminating the Elliott for exits and shall rely solely on the Fisher Transform to signal entries and exits.
I an do this because the position was placed the Robinhood Markets Inc. platform, which charges no commission on trades.
By Tim Bovee, Portland, Oregon, May 3, 2018
Update 6/11/2018: Exited. Results to be posted shortly.
I have entered a short vertical spread on SPY, using options that trade for the last time 43 days hence, on June 15. The premium is a 2.92 credit and the stock at the time of entry was priced at $262.50.
I made the decision to enter the trade in my account after concluding, based on Elliott wave analysis, that a 3rd wave down at the Minuette degree has begun. The Minuette is my preferred degree for trading options.
5/3 – 3:20 p.m. New York time
I entered two positions today, a short bear position using options on SPY and a long bull position using shares on SPXU, which is an inverse fund with the same underlying as SPY, the S&P 500 index.
5/3 – 1:05 p.m. New York time
I have entered a bear-call-spread position on SPY after reworking my chart analysis. One problem with what I had before — and it is one that I have mentioned previously — is that the “feel” wasn’t right. The duration and span of the waves seemed somewhat inconsistent.
The new count considers the 3rd wave down of the Minuette degree to have begun on May 2. The Minuette is my preferred tell-tale for entering trades.
A 3rd wave at the Minuette degree is also a 3rd wave at the Minute degree, and indeed at the Primary degree, which is the level that began its 1st wave down on Jan. 26, kicking off the bear market.
Here is my reworked chart, covering 15 days with 30-minute bars:
5/3 – 11 a.m. New York time
My goal today will be to find a re-entry point into the large exchange-traded funds, SPY foremost, but others as well. No guarantees of success of course. As thte old market wisdom has it, “When in doubt, stay out.”
By Tim Bovee, Portland, Oregon, May 3, 2018
5/2 – 9:45 a.m. New York time
Nothing has changed since my chart discussion on Tuesday. I am shutting down early because of a scheduling conflict, and anticipate no trades and no further posts today.
By Tim Bovee, Portland, Oregon, May 2, 2018
5/1 – 3:35 p.m. New York time
No trades today.
5/1 – 12:45 p.m. New York time
Having exited my SPY positions on Monday, the question now is when should I get back in. The decision whether to exit was based on Elliott wave analysis. The actual timing of the move was determined by the Fisher Transform, which moved to uptrending on the daily chart.
The Fisher this morning, in a classic whipsaw, moved back to downtrending. But that is not necessarily a signal to re-enter a bear position. The decision on whether to re-enter falls back on Elliott wave analysis.
In a declining market, Elliott answers the questions, What sort of decline is it? How does it fit into bigger picture? Only after those questions are answered can I make a decision to re-enter, and then time the re-entry itself with the Fisher Transform.
(The discussion that follows is pure Elliott. Readers unfamiliar with the analytical technique can find overviews in Wikipedia, Investopedia and StockCharts. The leading practitioners of Elliott wave analysis are at Robert Prechter’s Elliott Wave International. The principle textbook is The Elliott Wave Principle: A Key to Market Behavior.)
My goal is to trade the Minuette degree identified through Elliott wave analysis. By convention, it is identified on the chart by lower-case roman numerals and letters enclosed by parentheses. The next higher degree, Minor, completed its 2nd wave correction to the upside on April 18, and is now working through a 3rd wave to the downside within the chart’s larger downtrends.
In other words, it’s a bear market, and has been since Jan. 26. The Minor degree is in a motive wave to the downside, and that means a five-wave pattern, 1, 3 and 5 in the direction of the trend, and 2 and 4 as counter-trend corrections.That means I play the 1st, 3rd and 5th waves to the downside at the Minuette degree.
The Minuette 3rd wave ended on April 25. I didn’t recognize the end of the 3rd wave quickly enough when the present 4th wave began, and so ended up riding the A-wave of the 4th for much of its upward journey. Difficulty in recognizing transitions is a continual challenge in Elliott. There are no bells or sirens to mark the end of a wave, and often the change attains clarity only in retrospect.
Corrections in Elliott are three-wave patterns (A-B-C) and sometimes chains of triplicities. That suggests that the Minuette 4th wave continues, with the present decline being a B-wave counter-trend correction within the Minuette 4th.
Since I’m playing the Minuette degree, my proper course of action is to wait for the 4th wave to complete its run, and then trade the Minuette 5th wave to the downside.
The next movement will be a C-wave to upside. After that, things get ambiguous. Does the ensuing decline signal the beginning of the Minuette 5th wave? Or is it a continuation of a complex series of triple-wave patterns. I shall consider that question once it begins.
Elliott wave analysis is in many ways like a doctor’s diagnosis: There are rules and guidelines aplenty, but the variations within how each pattern plays out makes analysis of the current status tentative.
One rule is that the present B-wave to the downside cannot move past the beginning of the preceding A wave. That would be $260.85 on SPY, attained on April 25. If the present B wave moves below that level, then I shall need to reanalyze the chart to account for the new information.
Here is a 15-day chart, with 10-minute bars and my current wave count, captured at 9:38 a.m. on May 1.
By Tim Bovee, Portland, Oregon, May 1, 2018
Tim Bovee, Private Trader 
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