Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 fell for part of the session, to 3744 on the futures, and then reversed to the upside, remaining above the June 30 low, 3741.25, which marked the beginning of an upward correction of low degree.

Because the price remained above the June 30 low, I’ve revised this morning’s principal analysis to show that the upward correction has not ended. Rather, the correction, wave 2{-13}, has completed two waves and internally is now in its 3rd and possibly final wave, C{-14} to the upside.

The alternative is still viable: A larger correction, wave 4{-11}, that began on June 14 is still underway and is taking a compound form, as described below in this morning’s post.

Rather than revising this morning’s chart, I’m adding a new chart so that readers can compare the changes.

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

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose in overnight trading to 3957.75 and then reversed to the downside.

What does it mean? The rise was an upward correction within a larger downtrend, which began on June 28 from 3950, and the subsequent decline is a resumption of a smaller downtrend within the larger.

What is the alternative? The upward correction that began on June 14 is still underway and is forming a compound structure. The decline from the June 28 peak is a movement connecting the completed corrective pattern with a second corrective pattern, which has not yet begun.

[Outdated analysis: S&P 500 E-mini futures at 9:35 a.m., 80-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, downtrending wave 5{-11} began on June 28 from 3950 and internally is within its 1st wave — wave 1{-12} — which completed its first segment, wave 1{-13}, on June 30 at 3741.25 and its second segment, wave 2{-13}, overnight at 3957.75. The decline from the overnight peak is wave 3{-13}, which is likely to carry the price below the June 30 reversal point, 3741.25.

Under the alternative analysis, wave 4{-11}, an upward correction that began on June 14, completed a three-wave corrective pattern with wave C{-12}, ending on June 28 at 3950. The decline that followed is the first sign that wave 4{-11} is forming a compound correction. The decline is a connector wave, X{-12}, and it will be followed by a second corrective pattern.

Whichever analysis proves to match the events to come, it is all happening within downtrending wave 3{-10}, which began on June 2 from 4189, within wave 5{-9}, which began on May 30 from 4202.25.

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, July 5, 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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