3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to rise during the trading session, as an upward correction — wave 2{-9} — continued. No change in the analysis. I’ve updated the chart.

1:55 p.m. New York time

AMD earnings play entry. I’ve entered a bear call options spread on AMD, timed to coincide with today’s earnings announcement after the closing bell, and have posted a trade analysis.

1:40 p.m. New York time

SBUX earnings play entry. I’ve entered a bear call options spread on SBUX, timed to coincide with today’s earnings announcement after the closing bell, and have posted a trade analysis.

1:10 p.m. New York time

MOS earnings play exit. I’ve exited my bull put options spread on MOS for 25% of maximum potential profit and have updated the trade analysis with results.

12:55 p.m. New York time

GILD earnings play exit. I’ve exited my bull put options spread on GILD for 45% of maximum potential loss and have updated the trade analysis with results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise in overnight trading, reaching 117.75 points above the prior day’s turning point, 4056, and then turning down.

What does it mean? The rise is a low-level upward correction that will be followed by a resumption of the downtrend that began on April 28.

What’s the alternative? The puzzle during the correction will be to understand the size of each wave in relation to the others. After the overnight peak, the price pulled back a little, and the significance of that will depend upon the labeling of the declining wave’s degree. So far, the correct degree subscript for the internal wave is far from clear.

What does Elliott wave theory say? The decline from April 28 was wave 1{-10} and the rise that has followed is wave 2{-10}, both within wave 3{-9}, which in turn is a subwave of wave 5{-8}, its parent, 5{-7}, and the grandparent, 1{-6}, which began on January 4.

Wave 2{-10} will most likely have three waves within it, and since it’s a 2nd wave, it will probably take the form of a Zigzag pattern, with internal wave A in turn having five internal waves; B, three internals; and C, five internals.

When wave 2{-10} is complete, it will be followed by wave 3{-10}, a push to the downside that will carry the price below Monday’s reversal point, 4056, and perhaps significantly so.

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, 3/29/2022, 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, May 3, 2022

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.

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 www.timbovee.com.