3:30 p.m. New York time
Half an hour before the closing bell. The S&P 500 futures rose during the session, coming within four points of the high set so far by the upward correction that began on October 13, 2022.
The correction, wave 2{-7}, is in a series of final waves internally: Wave E{-11} within E{-10} with E{-9} within C{-8}. When wave E{-11} ends, all the rest in then nested sequence will also end, including wave 2{-7}, the upward correction. A powerful downtrend will follow, wave 3{-7}, carrying the price far below its present level.
The rapid rise today lends credence to this morning’s principal analysis, and also to Alternative #2, the compound correction scenario. Alternative #1, which has the correction ending on May 28 at 4243.25, has become less likely and will be taken off the table if the present rise moves above 4243.25.
I’ve updated the chart.
9:35 a.m. New York time
What’s happening now? The S&P 500 E-mini futures swung between the 4180s and just above 4200 overnight.
What does it mean? The movement did nothing to change the analysis. The upward correction that began on October 13, 2022 continues and is working through its endgame. At a small degree, four levels down within the correction, the final upward wave is underway. When that small wave is complete, the entire correction will be complete. It will be followed by a power downtrend.
What are the alternatives? There are two.
Alternative #1, correction ended. Under this scenario, the upward correction ended on May 28 at 4243.25 and the downtrend has begun. Although my principal analysis sees the correction as still being underway, the wave structure since May 28 is also consistent with the early stages of a downtrend.
Alternative #2, compound correction. The correction may form a compound structure. The end of the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining connecting wave and then a second corrective pattern. Compound corrections can be formed from as many as three corrective patterns. If this alternative happens, it will delay the start of the downtrend.
Reading the chart. I’ve added a Fibonacci retracement ladder, in red, comparing the decline that began on May 28 with the ride that preceded it.
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.

[S&P 500 E-mini futures at 3:30 p.m., 15-minute bars, with volume]
What does Elliott wave theory say? Here are the waves that underly the analyses.
Principal analysis:
- An upward correction, wave 2{-7}, began on October 13, 2022 and is underway.
- The correction’s first subwave, wave A{-8}, had five subwaves, meaning the correction is taking the form of a Zigzag
- Wave 2{-7} is in its final subwave wave, C{-8}, which began on March 13, 2023.
- Wave C{-7} is in its final subwave, wave E{-9}.
- Internally, wave E{-9} is in its final subwave, E{10}, which is also in its final subwave, E{-11}
- The end of wave E{-11} will cascade up the wave degrees, marking the end of waves E{-10}, E{-9}, C{-8} and of the correction, wave 2{-7}.
- Downtrending wave 3{-7} will follow the end of the correction and will carry the price a significant distance below present levels.
Alternative analysis #1, correction ended:
- What is marked as wave C{-11} on the chart should be marked as the end of wave E{-11}, and of all the larger waves in the fractal structure, including wave 2{-7}, which is the correction itself.
- The subsequent decline is the early stage of a downtrend, wave 3{-7}.
Alternative analysis #2, compound correction:
- The end of wave C{-8} may won’t be the end of the wave 2{-7} correction.
- Wave 2{-7} will form a compound structure and wave C{-8} ends the first corrective pattern.
- Wave C{-8} will be followed by a declining connector, wave X{-8}, and then by a second corrective pattern.
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, 4808.25 (down) (futures), 4818.62 (down) (index)
- S&P 500 Futures:
- 1{-2} Minute, 1/4/2022, 4808.25 (down)
- 1{-3} Minuette, 1/4/2022, 4808.25 (down)
- 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
- 1{-5} Micro, 1/4/2022, 4808.25 (down)
- 3{-6} Submicro, 8/16/2022, 4327.50 (down)
- 2{-7} Minuscule, 10/13/2022, 3577.75 (up)
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, June 1, 2023
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.
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.
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