Trader’s Notebook

12:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 declined during the first half of the session, reaching a low of 3900 on the futures and then rising slightly. Altogether, wave 5{-9}, which began on May 30 from 4202.25, has fallen by 7.2%. It is still in the early stages of its progress. No change in the analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures dropped sharply in overnight trading, reaching into the 3930s shortly after the opening bell.

What does it mean? By dropping below the high of May 23 — 3980.50 — the price indicated that the downtrend that began on April 21 has resumed. The upward corrected that preceded it ended on May 30 at 4202.25.

What are the alternatives? None at this point, but I’m quite certain that alternatives will develop, as they always do.

[S&P 500 E-mini futures at 3:30 p.m.,140-minute bars, with volume]

What does Elliott wave theory say? The 3980.50 peak was the end of 1{-12} under the prior analysis. If a 4th wave moves beyond the end of the preceding 1st wave — “beyond” means lower in this case — then it’s not a 4th wave, the map no longer matches the territory, and it’s a recount is required. And that’s what I’ve done.

See yesterday’s Trader’s Notebook for a chart showing the previous analysis.

Under the new principal analysis, the May 30 peak, 4202.25, marked the end the of wave 4{-9}, an upward correction, and the beginning of wave 5{-9}, the final wave in downtrend, wave 5{-8}, that began on April 21 from 4509.

The decline from May 30 is wave 1{-10} within wave 5{-9}. Internally, wave 1{-10} is now in its 3rd wave, which is often the most energetic of the waves in a trend.

Wave 1{-10} will be followed by an upward 2nd wave correction that will remain below the 4202.25 peak of May 30. Wave 2{-10} will be followed by an energetic wave 3{-10}, which will carry the price significantly lower.

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 10, 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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