Market holiday. U.S. markets will be closed on Monday for the Labor Day holiday, the traditional end of the summer vacation season. The S&P 500 futures will resume trading overnight and Tuesday’s markets will follow their normal schedules.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures traded net-sideways during the session, remaining between the 5640s and the 5590s. Elliott Wave Theory: The 4th-wave downward correction continues to work through what is most likely its endgame, assuming a typical pattern rather than one of the less common varieties.

Several economic eports that sometimes move markets will be released after trading resumes next week: Job openings, Factory Orders and the Federal Reserve’s Beige Book on Wednesday. On Thursday, the ADP sneak peak at the government’s jobs report. And the big one on Friday, the Employment Situation report, with the government’s employment and unemployment figures, key to the Federal Open Market Committee’s rate-setting next month, and also the Sahm Rule, an early-warning system that signaled the start of recession last month, prompting much skepticism among economists.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from slightly below 5610 into the 5630s.

What does it mean? Elliott Wave Theory sees the rise as a counter-trend move within the final subwave — falling wave 5 — within the larger final subwave — falling wave C — within the low-degree 4th wave downward corrective pattern that began on August 22.

When wave 5 is complete, it will also be the end of the larger wave C and, if the correction is typical, the still larger wave 4. See the “What happens next?” section  Tuesday, August 27 Trader’s Notebook for a description of ways the correction could extend in a compound form containing multiple corrective patterns.

The 4th-wave downward correction will be followed by a 5th-wave uptrend that will, if typical, carry the price into the 5670s and beyond.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What are the alternatives? None at present. Without a doubt, new alternatives will develop.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its next-to-the-last subwave, wave 4{-8}, a downward correction.
• Wave 4{-8} is in its final subwave, wave C{-9}.

Reading the chart. Price movements — waves – – in Elliott wave 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 30, 2024

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 closng bell. The S&P 500 futures rose to 5663.75 during the session, and then fell sharply back into the 5990s.

Applying Elliott Wave Theory, the pattern matches the principal analysis laid out this morning: The prior rise was the 4th subwave within wave C, which in turn is the final subwave of the 4th-wave downward correction that began on August 22.

The session high fell short by a few points of the start of wave C, from 5669. Under the principal analysis, the subsequent decline is the 5th and final subwave within wave C.

What happens next? 

This section is lifted verbatim from Tuesday, August 27 Trader’s Notebook.

There are two possibilities after wave C is complete, and possibilities within each possibility.

The 5th-wave uptrend will follow the end of the compound 4th-wave correction.

Most of the time, wave C is the end of the correction. In this case, the correction — wave 4 — will be followed by an uptrending 5th waves that, if typical, will move into the 5660s, beyond the beginning of wave 4, and possibly higher.

Some 5th waves are truncated and fail to reach the starting point of the preceding 4th wave.

Some 5th waves are extended and move much further beyond the beginning of the 4th wave, traveling a greater distance than proportionality suggested by the context of the wave.

Some corrective waves, especially 4th waves, form a compound structure, containing two or three A-B-C wave patterns. If that were to occur, then the present declining C wave within wave 4 would be followed by a rising X wave and then by another declining A wave, which will be followed by waves B and C. If the compound structure takes a triple form, there will be a second X wave, followed by a third A-B-C pattern.

And there’s an alternative. It’s possible to fit the session’s rise and decline pattern into this morning’s alternative analysis, which sees yesterday’s low, 5661.25, as being the end of wave C. If that’s the case, then wave 5, one degree larger, has begun. The rise that ended during the session is the 1st subwave within wave 5, and the decline now underway is the 2nd subwave.

This scenario will be disproven if the present decline falls below 5561.25, the start of the initial subwave — wave 1 — since it is a firm rule of Elliott Wave Theory that wave 2 never moves beyond the start of wave 1.

Charts. I’ve udpated the the lower, broader-view chart. The upper, close-up chart is unchanged.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, so far reaching into the 5630s as it retraces a portion of yesterday’s session decline.

What does it mean? Elliott Wave Theory sees the decline as the end of the middle subwave — wave 3 — within wave C, which is in turn the final subwave of the low-degree 4th-wave downward correction that began on August 22.

Close-up view. Here’s a close-up view of the downward correction, taken 35 minutes before the opening bell, showing the subwave count to wave C. In three-wave corrections — the pattern most often seen — the C-wave has five subwaves.

The next-to-the-last subwave within wave C — rising wave 4 — is now underway.

[S&P 500 E-mini futures at 8:55 a.m., 15-minute bars, with volume]

A broader view. The 4th-wave correction is the next-to-the-last subwave within a 3rd-wave uptrend that began on August 7. Encompassing that uptrend is a larger uptrend, the 1st wave within a larger 5th-wave uptrend that began on August 5.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What are the alternatives? If I squint my eyes at the chart, I can see yesterday’s session low, 5561.25, as being the end of the 5th and final wave within wave C. Should the price rise above the 5669, the end of the middle subwave, wave B, within the 4th-wave downward correction, then this scenario becomes more likely.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its next-to-the-last subwave, wave 4{-8}, a downward correction.
• Wave 4{-8} is in its final subwave, wave C{-9}.

Reading the chart. Price movements — waves – – in Elliott wave 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 29, 2024

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 futures fell into the 5370s during the session and then rose sharply, back into the 5610s so far.

Elliott Wave Theory: The movement is taking place within a C wave, the final subwave within the late-August 4th-wave downward correction. C waves have five subwaves, and although the details are a bit ambiguous, it looks to me as though the decline is the 3rd subwave within wave C.

A very low degree rising 4th subwave will follow, and then a decline, the 5th and final subwave within wave C.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose from the 5630s to the 5650s overnight, pulling back slightly as the opening bell approached.

What does it mean? The overnight fluctuations, in terms of Elliott Wave Theory, were part of the final subwave — wave C — within the 4th-wave downward correction that began on August 22. In yesterday’s Trader’s Notebook, I ran through the possible permutations wave C and its parent, wave 4, might take, and what comes after wave 4 reaches its end, and I refer the reader to that discussion. So far today, nothing in the analysis has changed.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What are the alternatives? None at present, beyond those in yesterday’s discussion of the possibilities. Without a doubt, new ambiguities will develop

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its next-to-the-last subwave, wave 4{-8}, a downward correction.
• Wave 4{-8} is in its final subwave, wave C{-9}.

Reading the chart. Price movements — waves – – in Elliott wave 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 28, 2024

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 futures returned to the 5640s during the session. Elliott Wave Theory: The final subwave, wave C, of the 4th wave downward correction that began on August 22 continues.

This morning’s analysis is unchanged.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose into the 5640s overnight and then fell rapidly into the 5610s.

What does it mean? The decline, according to Elliott Wave Theory, is a C wave, the final subwave in the 4th-wave downward correction that began on August 22. Wave C will have five subwaves and presently is tracing through its 3rd subwave.

What happens next? There are two possibilities after wave C is complete, and possibilities within each possibility.

• Most of the time, wave C is the end of the correction. In this case, the correction — wave 4 — will be followed by an uptrending 5th waves that, if typical, will move into the 5660s, beyond the beginning of wave 4, and possibly higher.
  • Some 5th waves are truncated and fail to reach the starting point of the preceding 4th wave.
  • Some 5th waves are extended and move much further beyond the beginning of the 4th wave, traveling a greater distance than proportionality suggested by the context of the wave.\
• Some corrective waves, especially 4th waves, form a compound structure, containing two or three A-B-C wave patterns. If that were to occur, then the present declining C wave within wave 4 would be followed by a rising X wave and then by another declining A wave, which will be followed by waves B and C. If the compound structure takes a triple form, there will be a second X wave, followed by a third A-B-C pattern.
  • The 5th-wave uptrend will follow the end of the compound 4th-wave correction.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What are the alternatives? None at present. Without a doubt, they will develop

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its next-to-the-last subwave, wave 4{-8}, a downward correction.
• Wave 4{-8} is in its final subwave, wave C{-9}

Reading the chart. Price movements — waves – – in Elliott wave 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 27, 2024

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 futures broke a firm rule of Elliott Wave Theory, as discussed in this morning’s analysis. The 4th-wave downward correction continues.

At the start of the session, the correction was in its middle subwave, wave B.

A few days ago I had identified the 4th wave as taking the form of a Zigzag, and the rule for that form is that a B wave cannot move beyond the start of the preceding A wave. During the session the S&P 500 futures attained a high of 5669, which 3.75 points higher than the starting point of wave A. Time for a reanalysis.

Wave B breaks a rule.

In analyses last week I referred to the ambiguity of the wave A count. If it’s a Zigzag correction, the A wave will have five subwaves; if a Flat, three subwaves.

I counted five subwaves on the futures chart this morning, making the correction a Zigzag. The simplest reanalysis, and therefore the most likely, is to revisit the nature of the correction. A Flat correction has three subwaves in wave A, and the firm rule for a B wave within a Flat is that it must retrace at least 90% of the A wave, with no upper limit specified.

A closer look at the futures chart didn’t clarify the matter, but the S&P 500 index chart can be read as having three subwaves within wave A, although that chart also has some ambiguities.

Ultimately, the Index is the source of all of its derivatives, including the futures, and I give it greater weight in resolving a rule violation.

New Principal Analysis

The downward correction that began on August 22 continues and is taking the form of a Flat. Wave B within wave 4 ended during the August 26 session at 5669, and the subsequent decline is the early stages of wave C.

Chart of the New Analysis

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

9:35 a.m. New York time

The analysis below was discredited during the session by an Elliott Wave Theory rule violation. See the afternoon update, above, for the new analysis.

What’s happening now? The S&P 500 E-mini futures rose into the 5660s after trading resumed overnight.

What does it mean? Elliott Wave Theory sees the 4th-wave downward correction that began on August 22 being in its middle subwave, wave B.

There is, however, a looming problem for the analysis. The A wave preceding the current wave B had five subwaves. That means that the correction is taking the Zigzag form. A firm rule of Elliott Wave Theory says that the B wave in a Zigzag never moves beyond the starting point of the preceding wave A.

In this case, wave A ended at 5665.25. Wave B overnight reached a high of 5664.50. That means wave B is $1 away from from violating the rule, which would invalidate the present analysis.

In theory the rule is violated if the price reaches 5665.26, but the futures move in 25-cent increments, so rather than the price being 76 points away from moving beyond the overnight high, it would take a $1 rise.

Chart of the Discredited Analysis

[S&P 500 E-mini futures at 9:35 a.m., 70-minute bars, with volume]

What are the alternatives? None at present. Without a doubt, they will develop

What does Elliott wave theory say? Here are the waves that underly the afternoon analyses. The morning analysis was invalidated by a violation of an Elliott Wave Theory rule.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} is in its next-to-the-last subwave, wave 4{-8}, a downward correction.
• Wave 4{-8} is in its final subwave, wave C{-9}

Reading the chart. Price movements — waves – – in Elliott wave 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 26, 2024

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 futures whipsawed wildly after Fed Chair Jerome Powell spoke at the Federal Reserve’s Jackson Hole, Wyo. Economic Symposium, ending up in the 5630s, close to where the price stood before the speech.

Elliott Wave Analysis: The decline from the August 22 high, the end of a 3rd-wave uptrend and the beginning of the low-degree 4th-wave downward correction now underway, was wave A within that correction. The rise prior to Powell’s speech was wave B, and the decline from today’s high, after Powell began speaking, is wave C, which is now underway. The 4th wave downward correction is in its final wave, unless it takes a complex form, with a second and perhaps a third 3-wave pattern.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose steadily overnight, from the 5590s to the 5630s.

What does it mean? The likeliest interpretation, using Elliott Wave Theory, is that the rise is the middle subwave — wave B — within a low-degree 4th-wave downward correction that began on August 22. A final, declining subwave — wave C — will follow that, when complete, will end the correction and begin an rising 5th wave, one degree higher, the final wave of an uptrend that began on August 7.

That 5th wave is a subwave of a larger uptrending 3rd wave, which in turn is a subwave of a still larger uptrending 1st wave, the initial subwave of 5th-wave uptrend that began on August 5 and that, if typical, will carry the price above the end of the preceding 3rd wave, 5721.50, and perhaps significantly above that level.

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What are the alternatives? It’s possible that the overnight decline was the 4th-wave correction in its entirety and that the low-degree 5th-wave uptrend has begun.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} appears to be in its next-to-the-last subwave, wave 4{-8}, a downward correction.

Reading the chart. Price movements — waves – – in Elliott wave 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 23, 2024

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 futures moved higher during the session, to 5665.25, and then fell sharply, so far reaching back into the 5580s.

Elliott Wave Theory analysis: I’ve interpreted the rise early in the session as the final subwave within the middle subwave, wave 3, within the larger 3rd wave of the 1st-wave uptrend that began on August 5. The session peak ended the smaller 3rd wave and began a subwave downward correction of low degree.

On the chart, the waves are labeled as follows, smaller to larger: Wave 3{-8} within wave 3{-7} within wave 1{-6}. Wave 3{-8} ended at the session peak, and wave 4{-8} has begun.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from the 5630s to the 5660s so far.

What does it mean? The rise, viewed through the lens of Elliott Wave Theory, is a sign that yesterday’s very small 4th-wave downward correction has ended and the uptrend has resumed: Wave 3, the middle subwave with the larger wave 1, the initial subwave within a still larger 5th-wave uptrend that began on August 1.

The wave numbers on the chart are followed by a subscript in curly brackets denoting how many degrees the wave is from Intermediate degree. The present Intermediate wave is wave 5{0}, which began in December 2018.

The chart numbers for the waves discussed above, from smaller to larger: Wave 5{-8} within wave 3{-7} within wave 5{-6}.

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What are the alternatives? The rising 3rd wave on the chart, wave 3{-7}, could still be in its 3rd subwave, wave 3{-8}, rather than in its 5th, wave 5{-8}. The chart lacks clarity at the smallest degree under discussion.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} appears to be in its final subwave, wave 5{-8}, an uptend.

Reading the chart. Price movements — waves – – in Elliott wave 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 22, 2024

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 futures traced a sideways course during the session, whipsawing from the 5620s to the 5660s and back into the 5610s as part of a very small subwave correction. The 5th-wave uptrend that began on August 5 continues to work through its early phase.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, from the 5610s to the 5630s.

What does it mean? When Elliott Wave Theory is applied to the chart, it shows the rise to be part of the initial subwave of an uptrending 5th-wave that began on August 5. Internally, the 5th wave is in wave 1, which is in its middle subwave, wave 3. The count within wave 3 is less clear, but it appears to be in its final subwave, wave 5.

What happens next? The uptrending 5th wave that began on August 5 is a pivotal movement within the fractal structure of the chart, as 5th-waves tend to be. When it is complete, it will cascade up the fractal structure, also marking the end of a series of 5th waves of increasing size across five degrees, or levels.

After that, a long-lasting downward correction, built from the usual uptrend and downtrends that are are the building blocks of any Elliott wave of any size.

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What are the alternatives? The rising 3rd wave on the chart could still be in its 3rd subwave rather than in its 5th.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.
• Wave 3{-7} appears to be in its next-to-the-last subwave, wave 4{-8}, a downward correction.

Reading the chart. Price movements — waves – – in Elliott wave 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 21, 2024

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 futures fell during the session from the 5640s to slightly below 5610. The initial subwave of an uptrending 5th wave that began on August 5 continues.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures moved sideways overnight reaching a low in the 5620s and a high in the 5640s

What does it mean? Elliott Wave Theory sees the pause as part of a subwave within the uptrending 5th ewave that began on August 5.

Which subwave? There’s the problem. In the early stages of a wave, the degree of the subwave –how many levels lower — is more a guess than a calculation. And the only way to come up with reasonable guess is to calculate the duration of the waves that came before, and then to label the current subwave so that it is more or less proportional to the earlier waves.

Which I have done. Here’s a spreadsheet showing the duration of the prior waves and what they imply for the duration of the present 5th wave, labeled wave 5{-5} on the chart. Wave 5{-5} is a subwave of wave 5{-4}, which began on April 18, and I’ve also calculated the length of that larger 5th wave as a total of the subwaves

Prior waves duration
WAVE	DEGREE	START	END	DAYS	TOTAL
1	5	4/18/2024	5/23/2024	35
2	5	5/23/2024	5/31/2024	8
3	5	5/31/2024	7/16/2024	46
4	5	7/16/2024	8/5/2024	20
Total					109

Current wave duration scenarios
WAVE	DEGREE	START	END	DAYS	SCENARIO TOTALS
5	5	8/5/2024	9/9/2024	35	144
5	5	8/5/2024	8/13/2024	8	117
5	5	8/5/2024	9/20/2024	46	155
5	5	8/5/2024	8/25/2024	20	129

The four scenarios for the smaller 5th wave — wave 5{-5} — has endings running from August 13 — which means wave 5 has the duration of the previous 2nd wave is already complete — to September 20, meaning the duration is that of the previous 3rd wave.

The present wave 5{-5} has so far lasted for 15 days, far to short a time, it seems to me, for a proportional 5th wave. The most likely comparison among the prior waves is wave 3, usually one of the two longest waves within a trend.

Fifth waves have a lot of variety. There lengths will usually move above the end of the prior 3rd wave, but sometimes a 5th falls short — a truncated wave — and sometimes it goes wildly beyond — extension.

Assuming a 5th of normal duration, I’m redoing the number to assume that wave 5’s length will be similar to that of the prior 3rd wave, with an ending around September 20.

I’ve renumbered the chart to show that the present wave is the 3rd subwave — wave 3{-7} — within the larger 1st subwave — wave 1{-6} — within the uptrending 5th wave — wave 5{-5} — that began on August 5.

If it turns out that the map doesn’t match the terrain — the analysis doesn’t match the chart — then I’ll adjust the wave numbers to conform.

The Chart.

[S&P 500 E-mini futures at 3:30 p.m., 225-minute bars, with volume]

What are the alternatives? See the “Which subwave?” section, above.

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its initial subwave, wave 1{-6}, which in turn is in its middle subwave, wave 3{-7}.

Reading the chart. Price movements — waves – – in Elliott wave 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 20, 2024

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 futures rose during the session, reaching into the 5620s. Elliott Wave Theory: The 5th-wave uptrend that began on August 5 continues and is in its 3rd subwave.

How small are the waves? It’s possible that what I’ve abled as wave 3{-6} is actually wave 1{-6} and it’s in its 3rd subwave, wave 1{-7}.

12:35 a.m. New York time

Elliott Wave Theory rule broken. Shortly after 11 a.m. the S&P 500, index and futures saw the rising 4th-wave on their respective charts move beyond the end of the preceding 1st wave, thereby breaking a firm rule of Elliott Wave Analysis and invalidating this morning’s analysis.

One of the strong points of Elliott Wave Theory is that when the map no longer matches the territory — when the analysis no longer matches the reality of the chart — the situation and the reason is perfectly clear, and the map must be redrawn in order to have a valid analysis.

Compare that to any number of technical analysis tools, where when the predicted uptrend quickly turns into a downtrend, the only clarity is for the trader to nod wisely and mutter, “Ah, a whipsaw”.

A new analysis. To make a new analysis that stayed in compliance with the rules of Elliott Wave Theory, I reworked the analysis from the start of rising wave 3 on February 21. The goal of the relabelling was to ensure that the rise that began on August 5 wasn’t a 4th wave, and so wouldn’t break the rule that invalidated the prior analysis.

Under the new principal analysis, the present rise from August 5 is an uptrending 5th wave that is in its middle subwave, wave 3.

The chart labels are a wave number followed by a subscript in curly brackets showing how many degrees (or levels) the wave is from Intermediate degree. The present Intermediate degree is wave 5{0}. The uptrending 5th wave now underway is wave 5{-5}, and its current subwave is wave 3{-6}.

All of this is happening within a series of 5th waves covering five degrees in the fractal structure. When the present wave 5{-5} is complete, it will cascade up the structure and simultaneously trigger the end of those five larger degrees: waves 5{-4}, 5{-3}, 5{-2}, 5{-1} and the Intermediate degree, wave 5{0}, which began in December 2018.

Moreover, there are three larger 5th waves above wave 5{0}. They will also be triggered by the end of wave 5{-5}. From smaller to larger, they are wave 5{+1}, Primary degree, which began in March 2009, wave 5{+2}, Cycle degree, which began in December 1974, and wave 5{+3}, Supercycle degree, which began in July 1932. Not a typo. The present Supercycle degree wave began in the Great Depression of the 1930s the year before Franklin D. Roosevelt took the oath of office as president.

Is this nuts? All of that seems a bit crazy, but has been baked into the fractal model of Elliott Wave Theory from its development by R.N. Elliott in the 1930s. A look at any chart — long term or short — clearly shows that larger waves have smaller subwaves, which in turn has subwaves that are smaller still.

And so it goes, from the smallest level to the largest. Elliott Wave Theory, by recognizing this complexity rather than seeing the chart as merely a squiggly line, makes it possible for us to do an analysis wherein a relatively small 5th wave ends and in so doing, triggers the end of a 5th wave eight degrees higher whose begining was eight years ago.

Out of caution, I intend to spend this week working with very long charts to ensure that this underlying structure of this analysis is valid, and shall report any findings here in Trader’s Notebook.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures set a new high on Friday, 5593.75, half an hour before the closing bell. When trading resumed overnight the price pulled back slightly, into the 5560s, before rersing slightly.

What does it mean? Friday’s high is important because of a rule of Elliott Wave Theory. Applied to the chart, it goes like this:

• A 4th-wave upward correction began on August 5th and is still underway.
• The preceding 1st wave ended on April 1 at 3600.75.
• A 4th wave can never move beyond the end of the preceding 3rd wave.
• Friday’s high is fewer than 10 points away of breaking that rule.

If the price does move above 3600.75, then the analysis no longer matches the reality of the chart and will be revised. Maybe. The S&P 500 futures are one of many products tied to the S&P 500 index. The futures move in 25-cent increments, the index in 1-cent increments. If the futures move above the end of wave 1 but the index does not, then perhaps it’s a case of rounding error. After all, which S&P 500 product set sets the standard? The futures, the SPY ETF, or the S&P 500 the index itself. I tend to give greatest credence to the index, but when there’s a divergence, I look hard at the problem to see if that approach is wrong.

On the index, Friday’s peak was 5554.25 and wave 1 ended on August 1 at 5566.16. If the index moves above 5554.25, then it has validated a rule of Elliott Wave Theory and there is no ambiguity about the analysis requiring revisions.

I’ve simplified the Fibonacci retracement ladder, in red, that appeared on earlier futures charts to show the 100% retracement: 5600.75, beyond which the 4th-wave cannot rise, and the top two Fibonacci retracement levels: 78.6% and 61.8%.

See the “What does it mean?” section in Friday’s Trader’s Notebook for a discussion of what happens after wave 4 ends.

[S&P 500 E-mini futures at 3:30 p.m., 360-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses.

Principal Analysis:

[I have redone this to conform to the new analysis.]

• Rising wave 5{0} is underway. It is a wave of Intermediate degree that began in December 2018.
• It is in its final subwave, wave 5{-1}.
• Within wave 5{-1}, rising waves 5{-2}, 5{-3} and 5{-4} are underway, as is wave 5{-5}.
• Wave 5{-5} is in its middle subwave, wave 3{-6}.

Reading the chart. Price movements — waves – – in Elliott wave 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 19, 2024

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.