3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fluctuated sideways during the session, leaving unresolved the ambiguities identified by this morning’s alternatives.

The principal analysis remains unchanged: The middle subwave, a B wave, within the 2nd-wave upward correction that began on January 5 continues.

I’ve updated the upper chart, a close-up view of the correction as traced by the futures.

3:15 p.m. New York time

Markets on Monday. Markets in the U.S. will be closed on Monday for Martin Luther King Day, a holiday honoring the civil rights leader. The S&P 500 futures will resume trading Monday evening at 6:30 p.m., and my next Trader’s Notebook post will be Tuesday morning at 9:35 a.m., both New York time.

2:05 p.m. New York time

Trades. I’ve entered two options trades today: A short Iron Condor on IWM that expires on February 16 and a short Iron Fly on SPY that expires on January 16, after the long holiday weekend. I’ve added trade analyses for IWM and SPY

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fluctuated between the 4820s and the 4790s overnight, rising into the 4830s as the opening bell sounded.

What does it mean? The relatively small 2nd-wave upward correction that began on January 5 continues to work through its middle subwave, wave B. The correction is part of a much larger 3rd-wave downtrend that began on December 27, 2023.

The red lines on the upper chart are the boundaries of wave B’s target range.

What are the alternatives? In the following discussion, indicate a wave’s position within the fractal hierarchy of the price movements with a subscript in curly brackets. The position indicator shows the number of degree away from what the developer of Elliott Wave Theory, R.N. Elliott, call the Intermediate Degree, which I designate as wave position {0}. Negative position indicators are smaller than position {0}, and positive indicators are larger.

There are three alternatives:

Alternative #1: The 2nd wave rise (wave 2{-2} on the chart) that preceded the 3rd wave (wave 3{-2}) is still underway and is taking a compound form. The present decline is an X wave, which will link the first corrective pattern within wave 2 to a second corrective pattern. A compound correction contains up to three corrective patterns.

Alternative #2: This is more of a general observation. Assigning a degree to subwaves early in a correction is, frankly, little more than an educated guess. The degrees I’ve assigned may change over time as the downtrend progresses. So for example, wave 2{-7} on the chart could well be wave 2{-6} or 2{-5}.

Alternative #3: The low-degree B subwave — wave B{-8} — may in have have ended at the overnight low, and if so, then the rise that followed is part of wave C{-8}, the final subwave within wave 2{-7}.

Charts. The upper chart, of the S&P 500 futures, shows the 3rd wave downtrend that began on December 27, wave 3{-2}. the lower chart, of the S&P 500 index, shows the 5th wave that began on December 26, 2018, wave 5{0}, which is taking the form of an expanding Diagonal Triangle.

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

[S&P 500 index at 9:34 a.m., 3-day bars]

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, a downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Wave 4{-1} is the parent wave of a downtrend, wave 3{-2}, that began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, declining wave B{-8} is underway and is within the first, wave A{-9}, of three subwaves.

Alternative #1:

• Wave 2{-2}, an upward correction that began on October 13, 2022, continues and is taking a compound form.
• Wave X{-3} is underway, connecting the now complete first corrective pattern and the not-yet-begun second corrective pattern.

Alternative #2:

• The upward correction that began on January 5, labeled on the chart was wave 2{-7}, is actually wave 2{-6}, or perhaps wave 2{-5}, or maybe even larger.

Alternative #3:

• Wave B{-8} ended overnight and wave C{-8} is underway.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 12/27/2023, 4841.50 (down)
• 1{-3} Minuette, 12/27/2023, 4841.50 (down)

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, January 12, 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, from the 4770s to the 4820s. The middle subwave, wave B, within the 2nd-wave upward correction that began on January 5 is in the second of three subwaves.

This morning’s analysis stands unchanged.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures whipsawed sharply after the latest Consumer Price Index showed that inflation rose in December. The futures price rose to 4837 and then fell to 4802.50 within a 2-minute span before settling in the 4820s.

What does it mean? The rise and subsequent fall brought the price of the ongoing 2nd-wave upward correction to within four points of the end of the preceding 1st wave. Under the rules of Elliott Wave Theory, a 2nd wave never moves beyond the endpoint of the 1st wave that came before.

On the chart, I’m treating the peak as the end of the first subwave of the correction, wave A, and the decline that followed as the early steps of the correction’s declining middle subwave, wave B.

The correction is taking the form of a Zigzag, with the A-wave having five subwaves, the B-wave three and the C-wave five. The B wave typically retraces 38% to 79% of the preceding A wave, giving a price target of roughly between 4786 and 4731.

I’ve marked the price target boundaries on the chart in red.

The fact that the A-wave came so close to the start of the upper boundary of the correction provides little room for the correction’s final subwave, wave C, to reach new highs. It sometimes happens that C waves fall short, a condition called “truncation” by Elliotticians.

The 2nd-wave correction discussed above is relatively small. Encompassing it in its entirely to a much larger declining 3rd wave that began on December 27, 2023 and that will carry the price below the start of the large 2nd wave that preceded it, from 3502, and most likely significantly below that level.

Within the fractal structure of the price movements, that larger 3rd wave is four degrees smaller than the small 2nd-wave upward correction now in progress.

What are the alternatives? There are two, unchanged from yesterday.

Alternative #1: The 2nd wave rise that preceded the 3rd wave is still underway and is taking a compound form. The present decline is an X wave, which will link the first corrective pattern within wave 2 to a second corrective pattern. A compound correction contains up to three corrective patterns.

Alternative #2: This is more of a general observation. Assigning a degree to subwaves early in a correction is, frankly, little more than an educated guess. The degrees I’ve assigned may change over time as the downtrend progresses.

[S&P 500 E-mini futures at 3:30 p.m., 25-minute bars, with volume]

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, a downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Wave 4{-1} is the parent wave of a downtrend, wave 3{-2}, that began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, declining wave B{-8} is underway and is within the first, wave A{-9}, of three subwaves.

Alternative #1:

• Wave 2{-2}, an upward correction that began on October 13, 2022, continues and is taking a compound form.
• Wave X{-3} is underway, connecting the now complete first corrective pattern and the not-yet-begun second corrective pattern.

Alternative #2:

The upward correction that began on January 5, labeled on the chart was wave 2{-7}, is actually wave 2{-6}, or perhaps wave 2{-5}, or maybe even larger.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 12/27/2023, 4841.50 (down)
• 1{-3} Minuette, 12/27/2023, 4841.50 (down)

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, January 11, 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 first subwave, wave A, of the upward correction that began on January 5, a 2nd wave of relatively low degree, has entered its 5th and final subwave. When the 5th subwave is complete, wave A will also be complete and will be followed by a declining B wave.

Changes from this morning: I’ve moved the endpoint of wave 4{-9}, a subwave of wave A{-8} within wave 2{-7} (the upward correction) to the January 9 reversal point, and labeled all that follows as part of wave 5{-9}.

I’ve updated the chart.

1:20 p.m. New York time

Trade. I’ve exited my short Iron Fly options position on XSP on expiration day, a day after entry, for a 13.3% profit and have updated the trade analysis with results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight from the 4780s to 4804, again setting a slightly higher high in the upward correction that began on January 5, and then fell back.

What does it mean? The correction is a 2nd wave and internally is in its first subwave, wave A. The correction is taking the Zigzag form, which means tht the A wave has five subwaves. It is present in its next-to-the-last subwave, declining wave 4. A final rising wave will complete wave A and begin declining wave B, which under the rules of Elliott Wave Theory will remain above the starting point of the preceding A wave, 4702.

All of the wave 2 drama described above is contained within a much larger downtrending wave 3, which began on December 27, 2023. In Elliott Wave Theory, stock prices form a fractal structure, meaning the patterns larger waves contain smaller patterns of the same sort, a reality that works its way down from the very large, such as the 5th wave that began on July 8, 1932 and is still underway, to the individual tick, a single transaction and the movement it causes in the price.

I label a wave’s place in the fractical structure as a subscript within curly brackets showing the wave’s position as levels above or below the uptrending 5th wave that began on December 26, 2018 and is taking the form of an expanding Diagonal Triangle. That 5th wave — wave 5{0} — is at what Elliott Wave Theory calls the Intermediate degree within the fractal structure. The downtrending 3rd wave mentioned above is wave 3{-2} — two degrees below wave 5{0}. The small 2nd wave upward correction that began on January 5 is wave 2{-7} — seven degrees below wave 5{0}.

What are the alternatives? And that complex structure is a set up for two alternatives.

There are two, unchanged from yesterday.

Alternative #1: The 2nd wave rise that preceded the 3rd wave is still underway and is taking a compound form. The present decline is an X wave, which will link the first corrective pattern within wave 2 to a second corrective pattern. A compound correction contains up to three corrective patterns.

Alternative #2: This is more of a general observation. Assigning a degree to subwaves early in a correction is, frankly, little more than an educated guess. The degrees I’ve assigned may change over time as the downtrend progresses.

[S&P 500 E-mini futures at 3:30 p.m., 25-minute bars, with volume]

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, a downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Wave 4{-1} is the parent wave of a downtrend, wave 3{-2}, that began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, wave A{-8} is underway.
• The final subwave within wave A{-8} — wave 5{-9} — began on January 9.

Alternative #1:

• Wave 2{-2}, an upward correction that began on October 13, 2022, continues and is taking a compound form.
• Wave X{-3} is underway, connecting the now complete first corrective pattern and the not-yet-begun second corrective pattern.

Alternative #2:

• The upward correction that began on January 5, labeled on the chart was wave 2{-7}, is actually wave 2{-6}, or perhaps wave 2{-5}, or maybe even larger.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 2{-2} Minute, 10/13/2022, 3491.58 (up)

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, January 10, 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.

Symbols traded today: XSP (1DTE)

I entered a short Iron Fly position on XSP on January 9, exiting the next day, expiration day, for a 13.3% profit.

XSP short Iron Fly

LOT:	3	ENTRY DATE:	1/9/2024
		EXIT DATE:	1/10/2024
		DAYS HELD:	1

Entry and Exit

METRIC	CREDIT	DEBIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Options premium	$ 1.45	$ 1.28	$ 0.17	13.3%	4821%
METRIC	ENTRY	EXIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Stock price	$ 476.22	$ 476.11	$ 0.11	-0.02%	-8%
Impllied Volatility Rate	6.6	6.3	-0.3
Days to expiration	1	0

The structure of the position

STRUCTURE	STRIKE	ODDS EXPIRE OTM	DELTA	IN PRICE	OUT PRICE	CHANGE
Calls
Long	478.00	76%	28	$ (0.49)	$ 0.19	$ (0.30)
Break-even	477.45	62%	41
Short	476.00	48%	54	$ 1.30	$ (0.84)	$ 0.46
Puts
Short	476.00	52%	46	$ 1.04	$ (0.86)	$ 0.18
Break-even	475.45	64%	35.5
Long	474.00	75%	25	$ (0.40)	$ 0.23	$ (0.17)
						======
					NET TOTAL:	$ 0.17

Risk and Reward

Per contract:
Reward	149.00
Risk	51.00
R/R Ratio (n:1)	0.3

By Tim Bovee, Portland, Oregon, January 9-10, 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 above the overnight high to a higher high, 4804, and I’ve moved the label for the end of wave 3{-9} to that session high. Otherwise, no change from this morning’s analysis. The 2nd-wave upward correction that began on January 5 continues to work through its initial subwave, rising wave A{-8}.

I’ve updated the chart.

2:35 p.m. New York time

Trades. Two very routine 1DTE (days to expiration) short Iron Fly positions.

I exited my position on SPY for a 12.2% profit and updated the trade analysis with results.

I entered a new position on XSP and posted a trade analysis.

I plan no trades on Wednesday, the day before the Consumer Price Index is published, or Thursday, the day before the Producer Price Index comes out, with the intent of avoiding surprises.

The next potential trade coinciding with an earnings announcement is on DAL, with a trade on January 11 and the earnings announcement on January 12 before the opening bell.

The earnings announcement season takes off on January 12 and I combed through the schedule for the next week. I’m looking for two characteristics: High volatility, with an Implied Volatility Rank (IVR) of 30% and preferably higher, and a higher price for the underlying shares, $50 a share and preferably higher, along with high liquidity. With volatility so low at present, I anticipate that there won’t be a large number of potential trades during the season.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures drifted lower overnight, from the 4790s to the 4770s.

What does it mean? A low-degree 2nd-wave upward correction began on January 5 and is in its rising initial subwave, an A wave, which in turn is in its declining 4th of five subwaves. All of this is happening within a 3rd-wave downtrend that began on December 27, 2023. The downtrend is five degrees larger than the 2nd wave correction and will eventually reach the low 3500s and most likely well below that level.

What are the alternatives? There are two, unchanged from yesterday.

Alternative #1: The 2nd wave rise that preceded the 3rd wave is still underway and is taking a compound form. The present decline is an X wave, which will link the first corrective pattern within wave 2 to a second corrective pattern. A compound correction contains up to three corrective patterns.

Alternative #2: This is more of a general observation. Assigning a degree to subwaves early in a correction is, frankly, little more than an educated guess. The degrees I’ve assigned may change over time as the downtrend progresses. The degrees on the chart labels are subscripts within curly brackets that follow the wave number. The degree number shows the wave’s position relative to wave 5{0}, an expanding Diagonal Triangle still underway that began on December 26, 2018. Wave 2{-7}, the present upward correction, is seven degrees lower than wave 5{0}.

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

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, a downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Wave 4{-1} is the parent wave of a downtrend, wave 3{-2}, that began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, wave A{-8} is underway.
• The next-to-the-last subwave within wave A{-8} — wave 4{-9} — is now underway.

Alternative #1:

• Wave 2{-2}, an upward correction that began on October 13, 2022, continues and is taking a compound form.
• Wave X{-3} is underway, connecting the now complete first corrective pattern and the not-yet-begun second corrective pattern.

Alternative #2:

• The upward correction that began on January 5, labeled on the chart was wave 2{-7}, is actually wave 2{-6}, or perhaps wave 2{-5}, or maybe even larger.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 2{-2} Minute, 10/13/2022, 3491.58 (up)

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, January 9, 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.

Symbols traded today: SPY (1DTE), USO (39DTE)

I entered a short Iron Fly position on SPY and exited the next day athte market open for a 12.2% profit/.

I also entered a longer-term short Iron Condor position on USO with a 50% profit target. The position expires on February 16, and I’ll manage as needed 21 days before expiration, on January 26.

2/1/2024: The USO position was unprofitable when management day arrived. I continued to hold the position hoping to, at the least, break even, and that’s in fact where the price stood when I exited on February 1 for a cost equal to what I had earned at entry.

SPY short Iron Fly

LOT:	1	ENTRY DATE:	1/8/2024
		EXIT DATE:	1/9/2024
		DAYS HELD:	1

Entry and Exit

METRIC	CREDIT	DEBIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Options premium	$ 1.93	$ 1.72	$ 0.21	12.2%	4432%
METRIC	ENTRY	EXIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Stock price	$ 471.54	$ 471.97	$ (0.43)	0.09%	33%
Impllied Volatility Rate	10.0	10.7	0.7
Days to expiration	1	0

The structure of the position

STRUCTURE	STRIKE	ODDS EXPIRE OTM	DELTA	IN PRICE	OUT PRICE	NET PRICE
Calls
Long	474.00	80.0%	20	$ (0.35)	$ 0.24	$ (0.11)
Break-even	472.93	62.0%	37.5
Short	471.00	44.0%	55	$ 1.56	$ (1.46)	$ 0.10
Puts
Short	471.00	56.0%	44	$ 0.98	$ (0.58)	$ 0.40
Break-even	469.93	70.5%	29.5
Long	468.00	85.0%	15	$ (0.26)	$ 0.08	$ (0.18)
						======
				`	NET TOTAL:	$ 0.21

Risk and Reward

Per contract:
Reward	193.00
Risk	107.00
R/R Ratio (n:1)	0.6

---

USO short Iron Condor

LOT:	1	ENTRY DATE:	1/8/2024
		EXIT DATE:	2/1/2024
		DAYS HELD:	24

Entry and Exit

METRIC	CREDIT	DEBIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Options premium	$ 0.68	$ 0.68	$ –	0.0%	0%
METRIC	ENTRY	EXIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Stock price	$ 65.91	$ 69.42	$ (3.51)	5.33%	81%
Impllied Volatility Rate	47.7	41.0	-6.7
Days to expiration	39	15

The structure of the position

STRUCTURE	STRIKE	ODDS EXPIRE OTM	DELTA	IN PRICE	OUT PRICE	NET PRICE
Calls
Long	73.00	82.0%	20	$ (0.78)	$ 0.68	$ (0.10)
Break-even	71.68	78.5%	23.5
Short	71.00	75.0%	27	$ 1.17	$ (1.29)	$ (0.12)
Puts
Short	60.00	78.0%	20	$ 0.91	$ (0.17)	$ 0.74
Break-even	58.68	81.0%	17
Long	58.00	84.0%	14	$ (0.62)	$ 0.10	$ (0.52)
						======
				`	NET TOTAL:	$ (0.00)

Risk and Reward

Per contract:
Reward	68.00
Risk	132.00
R/R Ratio (n:1)	1.9

By Tim Bovee, Portland, Oregon, January 8-9, February 1, 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 continued rising during the session, with the first subwave — wave A — of the ongoing 2nd-wave downward correction reaching into the 4790s.

It is most common in 2nd waves for the A wave to take the Zigzag form, with five subwaves. I count wave A as being in its middle subwave, wave 3.

I’ve updated the chart.

2:10 a.m. New York time

Trades. I exited my short Iron Fly options position on XSP, which I entered on Friday and held over the weekend, for a 41.8% profit and updated the trade analysis with results.

I entered two options positions today.

My short Iron Fly on SPY is an overnighter. I’ll exit Tuesday morning right after the opening bell.

My short Iron Condor on USO is a longer-term position with a 50% profit target. It expires 39 days after entry, on February 16, and if needed I’ll manage the position 21 days before expiration, on January 26.

I’ve posted trade analyses for both the SPY and USO positions.

I worked on entering a short Iron Condor position on ACI, timed to coincide with Tuesday’s earnings announcement before the opening bell. But it’s a lower priced underlying stock — less than $30 — and I couldn’t work out a structure that would meet my requirements and still produce sufficient return to be worthwhile. The next earnings-trade opportunity is DAL: Entry on January 11 and announcement on January 12 before the session begins.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined after trading resumed overnight, reaching into the 4710s and then reversing as the opening bell approached, returning to the 4740s.

What does it mean? A 2nd-wave upward correction deep within a much larger 3rd-wave downtrend is now underway. Elliott Wave Theory has a rule that applies to each 2nd wave: It never moves above the starting point of the preceding 1st wave. In this case, the 1st wave began on December 27, coincident with the start of a downtrending 3rd wave five degree larger in the fractal structure the price movements.

That starting point, 4841.50, is a non-negotiable barrier to the 2nd wave’s rise. Bottom line: The correction has a long distance to travel.

There’s no formal guidance on how much of the 1st wave will be retraced by the 2nd wave. My experience is that wave 2 usually retraces most of wave 1 and results in much happy talk concluding that the market’s uptrend has resumed, expectations that are eventually dashed.

The much larger parent wave of the 2nd-wave correction — wave 3 — will ultimately reach below the endpoint of the preceding 1st wave of the same degree — 3491.38. Typically a 3rd wave will move significantly below that endpoint.

What are the alternatives? There are two:

Alternative #1: The 2nd wave rise that preceded the 3rd wave is still underway and is taking a compound form. The present decline is an X wave, which will link the first corrective pattern within wave 2 to a second corrective pattern. A compound correction contains up to three corrective patterns.

Alternative #2: This is more of a general observation. Assigning a degree to subwaves early in a correction is, frankly, little more than an educated guess. The only guidance is that the time and distance characteristics of a subwave be similar to those attributes in waves of the same degree that came before. Not exactly a precise metric. So the degrees I’ve assigned may change over time as the downtrend progresses. The degrees on the chart labels are subscripts within curly brackets that follow the wave number. The degree number shows the wave’s position relative to wave 5{0}, an expanding Diagonal Triangle still underway that began on December 26, 2018. Wave 2{-7}, the present upward correction, is seven degrees lower than wave 5{0}.

[S&P 500 E-mini futures at 3:30 p.m., 20-minute bars, with volume]

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

Principal Analysis:

• Wave 5{0}, an expanding Diagonal Triangle, began on December 26, 2018.
• Within it, a downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Wave 4{-1} is the parent wave of a downtrend, wave 3{-2}, that began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, wave A{-8} is underway.

Alternative #1:

• Wave 2{-2}, an upward correction that began on October 13, 2022, continues and is taking a compound form.
• Wave X{-3} is underway, connecting the now complete first corrective pattern and the not-yet-begun second corrective pattern.

Alternative #2:

• The upward correction that began on January 5, labeled on the chart was wave 2{-7}, is actually wave 2{-6}, or perhaps wave 2{-5}, or maybe even larger.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 2{-2} Minute, 10/13/2022, 3491.58 (up)
• C{-3} Minuette, 10/27/2023, 4122.25 (up)

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, January 8, 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.

Symbols traded today: XSP short Iron Fly (3DTE)

On Friday, January 5, I entered a short Iron Fly position on XSP, held it over the weekend, and exited shortly after the opening bell the next Monday, January 8, for a 41.8% profit.

XSP short Iron Fly

LOT:	2	ENTRY DATE:	1/5/2024
		EXIT DATE:	1/8/2024
		DAYS HELD:	3

Entry and Exit

METRIC	CREDIT	DEBIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Options premium	$ 2.24	$ 1.58	$ 0.66	41.8%	5054%
METRIC	ENTRY	EXIT	CHANGE	CHANGE %	ANNUALIZED CHANGE %
Stock price	$ 469.14	$ 470.26	$ (1.12)	0.24%	29%
Impllied Volatility Rate	11.7	13.1	1.4
Days to expiration	3	0

The structure of the position

STRUCTURE	STRIKE	ODDS EXPIRE OTM	DELTA	IN PRICE	OUT PRICE	CHANGE
Calls
Long	473.00	84%	16	$ (0.25)	$ 0.12	$ (0.13)
Break-even	472.24	69%	30.5
Short	470.00	54%	45	$ 1.08	$ (1.06)	$ 0.02
Puts
Short	470.00	46%	55	$ 1.75	$ (0.68)	$ 1.07
Break-even	468.24	65%	36
Long	466.00	84%	17	$ (0.34)	$ 0.04	$ (0.30)
						======
					NET TOTAL:	$ 0.66

Risk and Reward

Per contract:
Reward	224.00
Risk	126.00
R/R Ratio (n:1)	0.6

By Tim Bovee, Portland, Oregon, January 5-8, 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 swung into a small upward correction during the session as the wave 3 downtrend that began on December 27, 2023 continued to work through its early stages.

Elliott Wave Theory defines two sorts of correction that are most common, each with three subwaves, A, B, and C: A Zigzag has five subwaves in the A wave, three in the B and five in the C. A Flat has three subwaves in A and also in B, and five subwaves in C. My experience has been that 2nd waves are more likely to take the Zigzag pattern, and 4th waves, the Flat. An alternation rule of Elliott Wave Theory is that if the wave 2 correction is of one pattern, wave 4 will be the other pattern.

All of this is happening within wave 3{-2} on the chart, a subwave of a larger declining wave 4{-1}, the next to the last wave of the expanding Diagonal Triangle that began in late 2018.

The first subwave, downtrending wave 1{-2}, took 282 days to reach completions, and the second subwave, upward correction 2{-2}, took 440 days. A 3rd wave is almost always longer than waves 1 and 2 by a large margin, so we can rest assured that the downtrending 3rd wave, with all of its internal ups and downs, will be with us for quite a long time.

I made two adjustments to the charts. I the upper chart, I’ve moved the end point label of wave 1{-8}. On the lower chart, I corrected the date of the wave 2{-2} end point.

1:45 p.m. New York time

Trades. I’ve entered a short Iron Fly position on XSP that expires on Monday, with the intent of selling shortly after the opening bell, and have posted an analysis of the trade.

Trades will be blocked on two days next week because of economic reports: On Wednesday by the Consumer Price Index before the opening bell on Thursday, and on Thursday by the Producer Price Index on Friday.

I’ll consider entering short-term Iron Condor options positions covering earnings announcements next week: ACI on Monday for a pre-opening Tuesday announcement, and DAL on Thursday in anticipation of a Friday announcement before the opening. Whether actually take the trade or not depends upon whether the options maintain their high implied volatility and whether their pricing will provide sufficient return.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined overnight, reaching a low of 4702 as the December employment statistics were released and then rising back into the 4720s.

What does it mean? The 3rd-wave downtrend that began on December 27, 2023 continues and is in its early stages. In Elliott Wave Theory, when a wave has first begun, determining the degree of the subwaves — where they reside in the fractal structure of the movement — is little better than a guess. I’ve chosen to label the waves as being six degrees lower than the 3rd wave that encompasses them.

That degree — {-8} on the chart — seems similar in size and duration to {-8} waves within the preceding 2nd wave upward correction, so I’ll go with that labeling for now. That degree could be modified as the the 1st subwave — wave 1{-3} — within the downtrend — wave 3{-2} — progresses.

Under the Elliott Wave Theory’s analytical rules, a 3rd wave trend always moves beyond the starting point of the preceding 2nd wave. That means the present 3rd wave, at a minimum, will move below 3502, where wave 2{-2} began on October 13, 2022.

A 3rd wave almost always moves far below the starting point of wave 2.

The parent of wave 3{-2} is wave 4{-1}, the declining next-to-the-last wave of a very large expanding Diagonal Triangle that began on December 26, 2018. A characteristic of expanding triangles is, at the extremes, the highs keep moving higher and the lows, lower. Wave 4{-1} will eventually come close to or meet the lower boundary of the triangle’s price channel, which is presently in the 1750s and declining further every session.

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

Charts. The upper chart, tracking the futures, shows a close-up of the downtrending 3rd wave that began on December 27. The lower chart, tracking the index, shows the expanding Diagonal Triangle, with the upper and lower price channels drawn in red.

[S&P 500 E-mini futures at 3:30 p.m., 15-minute bars, with volume]

[S&P 500 index at 3:29 p.m., 13-day bars]

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

Principal Analysis:

• A downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Within wave 4{-1}, a downtrend, wave 3{-2}, began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.
• Deep within that downtrend’s 1st wave, downtrending wave 5{-8} and its parent, wave 1{-7}, ended at the overnight low, 4702. Wave 2{-7} is now underway, an upward correction of low degree, and within it, wave A{-8} is underway.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 12/27/2022, 3491.58 (down)
• 1{-3} Minuette, 12/27/2022, 3491.58 (down)

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, January 5, 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 fluctuated between the 4730s and the 4760s during the session, in a small upward correction deep within a much larger 3rd wave downtrend that began on January 2.

This morning’s analysis stands unchanged. I’ve updated the upper chart, a close-up of the futures, and have left the lower chart, a long-term view of the index back to 2018, as it was this morning.

1:30 p.m. New York time

Trades. I exited my short Iron Condor position on IWM, 15 days after entry and 22 before expiration, for an 11.6% loss admid a geeneral market decline since trading resumed for the new year. I’ve updated the trade analysis with results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures moved largely sideways in overnight trading, drifting lower as the clock ticked toward the opening bell.

What does it mean? The decline brought the price below the target range of the downward 4th wave of small degree within the upward correction that began on October 13, 2022. The 4th wave is five levels deep within wave 2. All of the waves in between are in their final stages, so what that deeply buried small wave does will determine whether the correction is over or not.

I said yesterday that a decline below the target range would trigger a reassessment of the analysis. The time spent below the range was brief — only a few minutes — and I was tempted to delay the relabeling of the chart until the decline has greater staying power. Nonetheless, the decline has formed five waves to the downside, suggesting a trend rather than a correction.

The new principal analysis: Wave 2 is complete and downtrending wave 3 has begun and is in its early stages. It will eventually carry the price below the start of the preceding 1st wave, 3502 on the futures, and almost certainly significantly below that level.

Could this declaration be premature? It certainly could, and if that proves to be the case, then I’ll return the chart to its January 3 version.

What are the alternatives? It’s possible that wave 2{-2} will take a compound form, containing two or three corrective patterns. if that proves to be the case, then the present declining is an X wave, separating the first corrective pattern, which ended overnight, from the second corrective pattern.

The Charts. The upper chart shows the final subwave of the wave 2 correction and the start of the wave 3 downtrend on the S&P 500 futures. The lower chart shows the entirety of the expanding Diagonal Triangle that began in December 2018 and contains the wave 2 upward correction.

[S&P 500 E-mini futures at 3:30 p.m. , 2-hour bars, with volume]

[S&P 500 index at 9:34 a.m., 3-day bars]

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

Principal Analysis:

• A downtrend, wave 4{-1}, began on January 4, 2022 and is underway.
• Within wave 4{-1}, an upward correction, wave 3{-2}, began on January 2, 2024 and is in wave 1{-3}, the first of five subwaves.

Alternative Analysis:

• Wave 2{-2} is still underway and is taking a compound form.
• The first corrective pattern ended on January 2, the end of wave C{-3}.
• A declining connector wave is underway, wave X{-3}.

We Are Here.

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, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 1/2/2024, 4841.50 (down)
• 1{-3} Minuette, 1/2/2024, 4841.50 (down)

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, January 4, 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.