Trader’s Notebook

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range overnight

What does it mean? The third leg of an upward correction that began on May 12 continues. Internally, that third segment is in a correction to the downside.

What are the alternatives? The same three as those listed in yesterday’s Trader’s Notebook.

Alternative #1: The May 30 peak marks the end of the larger upward correction and the downtrend that began on April 21 has resumed.

Alternative #2: The final move to the upside may fall short of the May 30 peak, a condition known as truncation. Or it could move beyond the peak.

Alternative #3: Most corrections have three waves internally. Sometimes a correction will connect two or three corrective patterns together before reaching its end.

[S&P 500 E-mini futures at 9:35 a.m., 70-minute bars, with volume]

What does Elliott wave theory say? The larger upward correction is wave 4{-9}. It is in its third internal movement, wave C{-10}. The C wave in turn is undergoing a downward correction, wave 4{-11}, whose completion will be followed by a rise that will complete wave C{-10} and most likely wave 4{-9} as well.

The likely target range for completion of wave 4{-9} is marked with blue dashed lines on the chart. The upper boundary of the range is at 4203.50. That range is a tendency, not a firm rule, and so the price could move higher. However, it cannot move above the beginning of wave 1{-9}, at 4509.

Under Alternative #1, wave C{-10} ended at the May 30 peak.

Under Alternative #2, the upward wave 5{-11} that will follow the present wave 4{-11} pullback will fall short of 4303, the May 30 peak, in a truncated 5th.

Under Alternative #3, the end of wave C{-10} won’t be the end of its parent, wave 4{-9}. Instead, wave C{-10} will be followed by a downward connecting wave, X{-10} and then a second corrective pattern, which possibly will be followed by another connecting wave and then third 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)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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)
  • 5{-7} Minuscule, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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, 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.

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