Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to fall during the session. Wave C{-12} within wave 4{-11} is still underway and internally is in its 5th and final wave. No change in the analysis. The chart has been updated.

1:25 p.m. New York time

OLLI bearish earnings play exit. The delayed earnings announcement by OLLI finally happened this morning. The metrics all pointed to a very negative earnings surprise, OLLI came through with lagging numbers for both earnings and revenue, and the price rose like a 4th of July fireworks rocket. I exited at 100% of maximum potential loss and have updated the trade analysis with details of the sad tale.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures, in overnight trading, declined slightly from yesterday’s high, 4164.

What does it mean? The decline is the beginning of the final leg of the third segment of a corrective pattern that began on May 30. It will be followed by a resumption of the downtrend that began on April 21.

What are the alternatives? Corrections occasionally will form complex structures, linking two or three corrective patterns together. If this corrective pattern behaves that way, then the resumption of the downtrend will be delayed.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What does Elliott wave theory say? The decline that began on June 2 from 4189 is wave C{-12}, the third wave within a corrective pattern that began on May 30 from 4202.25. With the decline that began from yesterday’s peak, the C wave is now in its 5th and final subwave.

Under my principal analysis, the end of wave C{-12} will also be the end of its parent, wave 4{-9}, an upward correction that began on May 30.

Under my alternative analysis, wave 4{-9} will form a compound correction. In this scenario, wave C{-12} will be followed by a connecting wave, X{-12}, and then by a second corrective pattern, continuing wave 4{-9}.

In any case, once wave 4{-9} is complete, it will be followed by a significant decline, wave 5{-9}, which is likely to drop below the end of the previous downtrending wave, 3{-9}, which was completed on May 12 at 3855. Some 5th waves come up short. And some 5th waves move significantly below the end of wave 5{-9}.

This is all happening within wave 5{-8}, a downtrend that began on April 21 from 4509. The end of wave 5{-9} will also be the end of wave 5{-8} and also of its parent, wave 5{-7}, which began on March 29 from 4631.

It’s a clear illustration of the fractal structure of market movements, with waves within waves that form a quite complex whole.

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 8, 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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