Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has declined during the session, falling from the overnight peak of 3948 on the futures down at one point to below 3900. The upward correction, wave 4{-11}, continues, as does its rising subwave, C{-12}. The C wave has met all requirements for completion, meaning that the overnight high may have been the end of the corrective pattern, or there may have further upside ahead. I’ve updated the chart.

10:35 a.m. New York time

NKE earnings play entry. I’ve entered a short bear call vertical spread on NKE timed to coincide with an earnings announcement, using options that trade for the last time on August 19, and have posted an analysis of the trade.

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 into the mid-3900s before pulling back slightly.

What does it mean? The upward correction that began on June 14 continues and is in its third leg, which may be the final segment of the correction. The correction has retraced 50% of the preceding decline.

What is the alternative? The correction may form a compound structure, composed of two or three corrective patterns.

The Chart. I’ve placed a Fibonacci retracement ladder on the chart, in red. It shows the extent to which the upward correction has retraced the decline that preceded it.

[S&P 500 E-mini futures at 3:30 p.m., 160-minute bars, with volume]

What does Elliott wave theory say? Wave 4{-11}, the upward correction that began on June 14 from 3708.50, has retraced 50% of the preceding decline, wave 3{-11}, which began on June 8 from 4164. The correction is tracing a Flat pattern, which is in its 3rd wave — wave C{-12}. Corrections tend to end close to Fibonacci retracement levels. A 50% retracement (3636.25) is one of the Fibonacci levels. So are the 68.8% (3990) and 78.6% (4066.52) retracements.

Most corrections end with the third wave. In this case, wave 4{-11} will be followed by wave 5{-11}, a resumption of the downtrend that began on June 2. The 5th wave can be expected to carry the price below the lowest point of the preceding 4th wave, 3639, although that’s not always the case. Sometimes a 5th wave will come up short, a condition called “truncation” in Elliott wave terminology.

Some corrections form a compound pattern. If that happens with wave 4{-11}, then subwave C{-12} will be followed by a connecting wave, X{-12}, and then a second corrective pattern. Some compound corrections contain three corrective patterns.

Whether wave 4{-11} is a simple structure or a compound one, it will be followed by wave 5{-11}, as described above.

This is all happening within wave 3{-10}, a downtrend that began on June 2 from 4189. That 3rd wave, in turn, is a child of wave 5{-9}, which began on May 30 from 4202.25. All are subwaves of wave 5{-8}, which began on April 21 from 4509.

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 27, 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.

Creative Commons 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