Trader’s Notebook

3:30 p.m. New York time

Morning Trader’s Notebook disppeared. This morning’s Trader’s Notebook somehow never made it to the blog and is now wandering aimlessly around the Metaverse, a ghost of a post.

So, this post takes care of both this morning and this afternoon.

Half an hour before the closing bell. The S&P 500 E-mini futures fell in morning part of the session and then began to rise.

What does it mean? The decline from the May 30 high is a downward correction within the final leg of a larger upward correction within a still larger downtrend.

What are the alternatives? There are three, the same as those discussed yesterday.

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.

Alternative #3: The correction could take a compound form, stringing several corrective patterns together.

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What does Elliott wave theory say? Under my principal analysis, a upward correction, wave 4{-9} has been underway since May 12. It is now in the final wave, C{-10}, of a three-wave Flat corrective pattern. Within wave C, a downward correction, wave 4{-11}, began on May 30. It can be counted as being in its 4th of five waves internally. When complete, wave 4{-9} will be followed by wave 5{-9}, a continuation of the downtrend that began on April 21 from 4509.

Alternative #1: Wave 4{-9} ended at the May 30 peak, 4202.25.

Alternative #2: Although the 5th and final wave within wave C would normally move above the prior peak, it’s possible that wave 5{-10} will be truncated, coming in below 4202.25.

Alternative #3: Most of the time in a flat, the C wave marks the end of the correction. Sometimes, the correction forms a compound structure, stringing two or three corrective patterns together. If wave 4{-9} forms a compound structure, wave C{-10} will be followed by a connecting wave, X{-10}, and then another 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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