Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 reversed and is rising. I’ve labeled the June 1 low of 4071.50 as the end wave 4{-11} and the present rise as wave 5{-11}. When 5{-11} is complete, wave C{-10} will also be complete, and most likely, the upward correction that began on May 12 will also be complete.

An alternative analysis is that the June 1 low marked the end of the first wave within 4{-11}. If that’s the case, then there are most likeIy two more waves to go before wave 4{-11} is complete. As is often the case, the degree of each movement is somewhat ambiguous.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose slightly overnight but then fell slightly at the opening bell.

What does it mean? A low-level downward correction is underway, within a the final, rising leg of a larger upward correction, all happening in a downtrend that began on April 21. The downward correction will be followed by a push to the upside that will exceed the May 30 high, 4202.25, completing the larger upward correction and resume the downtrend.

What are the alternatives? There are three.

Alternative #1: The final leg of the larger, upward correction ended on May 30 at 4202.25, and the downtrend has resumed.

Alternative #2: The final push to the upside may be truncated, falling short of the May 30 high.

Alternative #3: The end of the final, rising leg of larger upward correction won’t be the final leg. Instead, the correction will take a compound structure, adding on a second corrective pattern.

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

What does Elliott wave theory say? Principal analysis: An upward correction, wave 4{-9}, is in its final wave internally, wave C{-10}. The C wave in turn is in its next-to-the-last movement, wave 4{-11}. When wave C{-10} reaches completion with the end of wave 5{-11}, most likely above the May 30 high of 4202.25, it will also be the end of wave 4{-9} and the beginning of wave 5{-9}, resuming the downtrend that began on April 21.

Alternative #1: Wave 4{-9} ended on May 30, and wave 5{-9} is underway.

Alternative #2: Wave C{-10} within wave 4{-9} will fall short of 4202.25, a pattern known as truncation in Elliott wave terminology.

Alternative #3: The end of wave C{-10} won’t be the end of wave 4{-9}. Instead, wave 4{-9} will form a compound structure, with wave C{-10} being followed by wave X{-10}, which in turn will be followed by a second 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 2, 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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