Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose during the session, approaching to within 53 points of the highest point this 4th wave upward correction can reach without violating the rules of Elliott wave analysis. As I put it in my cheatsheet: “If the wave moves beyond the end of wave 1, then it’s not wave 4”. No change in the analysis. I’ve updated the chart.

3:15 p.m. New York time

SPY options spread entry. I’ve entered a short bear call options spread on SPY, based on Elliott wave analysis, in an attempt to capture the 5th wave decline that will follow the end of the present 4th wave correction to the upside. I’ve posted an analysis of the trade.

2:25 p.m. New York time

UNP earnings play exit. I’ve exited my short iron condor spread on UNP for an 8.2% return and have updated the trade analysis with full results.

2 p.m. New York time

XOM earnings play exit. I’ve exited my short bull put spread on XOM for a 44.1% return and have updated the trade analysis with full results.

1:45 p.m. New York time

C earnings play exit. I’ve exited my short iron condor spread on C for a 40% return and have updated the trade analysis with full results.

1:15 p.m. New York time

GM earnings play entry. I’ve entered a short bull put options spread on GM timed to coincide with the company’s earnings announcement after the closing bell today. I’ve posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded sideways overnight in the space between the 50% and 61.8% Fibonacci retracement levels.

What does it mean? The upward correction that began on January 24 is nearing an end. It may well rise further but will remain below 2572.75. It will be followed by a resumption of the downtrend that began on January 4.

What are the alternatives? There are 2. Both rely on the chart being analyzed as showing that the corrective pattern is complete.

  1. The downtrend following the correction is taking the first tentative steps of its resumption.
  2. The downtrend within the correction is the beginning of will be followed by a second corrective pattern in a complex correction.
[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What does Elliott wave theory say? Wave 5{-9} within rising wave C{-8} is underway, as the parent wave 4{-7} nears it’s end. Under the rules of Elliott wave analysis, a rising 4th wave must remain below the end of the preceding 1st wave. Wave 1{-7} ended on January 10 at 4572.75. Wave 5{-9} has almost reached its end but could rise a bit more, perhaps to the 61.8% retracement level, 4538.28, which is 35 points below the end of wave 1{-7} and so is within the rules.

Under the first alternative, wave C{-8} is complete, along with its parent, wave 4{-7}. Downtrending wave 5{-7} has begun and will carry the price below 4212.75, the end of wave 3{-7}.

Under the second alternative, wave C{-8} is complete and will be followed by downward wave X{-8}, which marks the end of the first corrective pattern and the beginning of a second corrective pattern within a compound structure. Wave X will remain above 4212.75.

We Are Here.

These are the wave currently in progress. 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.

  • 5{0} Intermediate, 12/21/2018, 2316.75 (up)
  • 3{1} Minor, 3/23/2018 2174 (up)
  • 5{-2} Minute, 10/4/2020, 4267.50 (up)
  • 4{-3} Minuette, 1/4/2022, 4808.25 (down)
  • A{-4} Subminuette, 1/4/2022, 4808.25 (down)
  • 1{-5} Micro, 1/4/2022, 4808.25 (down)
  • 1{-6} Submicro, 1/4/2022, 4808.25 (down)
  • 4{-7} Minuscule, 1/24/2022, 4212.75 (up)
  • C{-8} Subminuscule, 1/26/2022, 4263.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, February 1, 2022


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.

Creative Commons 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