Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 fell below the 50% retracement level and remained there for much of the trading session. I’m adding another alternative analysis to the mix: That wave C{-8} ended on February 2 at 4586 on the futures chart and that downtrending wave 5{-7} has begun. Otherwise, no change in my analysis. I’ve updated the chart.

10:55 a.m. New York time

PRU earnings play entry. I’ve entered a short bull put options spread on PRU, coinciding with the company’s earnings announcement after the closing bell. 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 fell in overnight trading from Wednesday’s peak, 4586, which is close to the 61.8% Fibonacci retracement level. The decline has reached the 50% retracement level.

What does it mean? The upward correction that began on January 24 is underway. It is in its third and possibly final leg. Internally, that third leg is near completion, with one more upward movement remaining, which will carry the price above 4586. Once the correction is complete, the downtrend that began January 4 will resume, carrying the price below the correction’s starting point, 4212.75.

What’s the alternative? Although a corrective pattern has three waves, it is possible that the correction will extend in a compound structure that links two corrective patterns together, delaying resumption of the downtrend.

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

What does Elliott wave theory say? Under my principal analysis, the upward correction, wave 2{-7} is underway and is most likely in its final wave, C{-8}. Internally, the drop off from yesterday’s high is wave 4{-9]. and it will be followed by wave 5{-9} to the upside, which will complete the corrective pattern that began on January 24. Wave 4{-9} will be followed by wave 5{-9}, which will carry the price below 4212.75. Third waves tend to have a lot energy and so I would expect this 3rd wave to move significantly below that level.

Under the alternative analysis, wave 2{-7} will extend in a compound correction. Upward wave C{-8} will be followed by upward wave X{-8}, which will connect the first corrective pattern with a second corrective pattern. I’ve seen such compound corrections most often withinin 4th waves, but they do sometimes occur in 2nd waves.

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 3, 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