Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 E-mini futures continued to fall during the session, reaching below 4420 in the late afternoon.

The decline below 4444.50, the end of wave 3{-9} on April 6, confirms this morning’s principal analysis, that the upward correction, wave 4{-9} ended on April 8, and wave 5{-9} is now underway.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures opened at 4488.75 when trading began anew Sunday evening and immediately resumed the decline that began on Friday, reaching 4446.25 as the opening bell approached.

What does it mean? The power and form of the decline suggest that the downtrend that began on April 5 has resumed. That scenario will be confirmed if the price moves below 4444.50, the end of the middle leg of the decline and the beginning of the upward correction at ended on April 8 at 4519.75.

What’s the alternative? The decline can also be seen as connecting two corrective patterns in a compound structure. This interpretation will gain credibility if the price reverses significantly to the upside.

[S&P 500 E-mini futures at 3:30 p.m., 15-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, the April 5 peak ended wave 4{-9}, an upward correction within wave 3{-8}, the middle wave of a downtrend that began on March 29. The final wave of the downtrend, wave 5{-9}, began on April 5 and internally appears to have completed four waves and to have begun its final wave.

Wave 5{-9}, when complete, will also mark the end of wave 3{-8}. It will be followed by an upward correction, wave 4{-8}. It will retrace a significant portion of the decline, wave 5{-7}, that began on March 29 from 4631. And after the correction, wave 5{-8} will carry the price below 4101.75, the end point of wave 3{-7}.

With so many endings ahead, the S&P 500 will feel like a roller coaster ride for awhile. One thing I shall keep in mind as I do my analysis is that the major trend is down, a decline that began on January 4 from 4808.25.

Under the alternative scenario, the April 5 peak marked the end of wave C{-10}, but the parent, wave 4{-9}, is still underway in a compound correction. In a compound correction two or three corrective patterns are strung together, each separated by an X-wave. So in the first upward corrective pattern — wave A, B and C, or up-down-up — is followed by a downward X-wave with three waves internally, and then by a second corrective pattern of three waves if its a Flat or a Zigzag, the most common corrective patterns.

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.

  • Index:
  • 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)
  • Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • 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, 3/31/2022, 4631 (down)
  • 3{-8} Subminuscule, 4/5/2022, 4588.75 (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, April 11, 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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