10:50 a.m. New York time
What’s happening now? The S&P 500 E-mini futures pushed downward in overnight trading and continued to fall after the opening bell, piercing the lower boundary of the Minor degree price channel and continuing on with a great deal of energy.
What does it mean? The energy of the fall and the degree to which the price has pierced the lower boundary has tilted in favor of my alternate analysis: The upward correction that began on March 22 from 2174 ended on July 23 at 3284.50.
What does Elliott wave theory say? The July 24 peak is the beginning of Primary wave 3 to the downside, a movement that will have its ups and downs, as all movements do, but will eventually push well below the 2174 level that marked the end of Primary wave 1 to the downside, the first wave of the major decline that began February 19 at 3397.50.
I had initially read the July 24 peak as the end of Minor wave d within Primary wave 2. I now read it as the end of Minor wave 5 within Intermediate wave C.
Primary wave 3’s first move will be Intermediate wave 1, which will be followed by an upward correction that could come close to the first wave’s starting point. The correction, however, cannot move above 3284.50, where Intermediate wave 1 began.
Moreover, Intermediate wave 1 will be followed by an upward correction, perhaps again challenging the 3284.50 mark, before beginning what will prove to be a downward push of significance.
What is the alternative? It’s still possible, although less probable than I thought yesterday, that the July 23 peak is wave Minor wave 3. If a price reversal upward back into the price channel proves that to be the case, then yesterday’s analysis still stands and we are seeing Minor wave 5 of Intermediate wave C within Primary wave 2. If this is the case, then there will be one more wave up. At that point, either Primary wave 2 will end under the alternate analysis, or it will add a third component to the compound correction it has traced.
What about my trades? The question now, under the principle analysis, becomes, when is the best time to enter? And the answer for me is, near the later stage of Intermediate wave 2. I don’t want to get in now, because I know that I have two uptrends ahead of me: Minor and Intermediate, and both will typically approach the 3350 level. (That’s a tendency, not a rule, and they might not.) So, close watch, but not yet.