Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose slightly during the day. The futures remained within the mid-3800s.

Wave 4{-12} is in its first subwave, A {-13}, and the upward A wave can be counted as being in its third and final wave. The middle segment of wave A{-13} seem a bit small for its position within the hierarchy of waves, but such oddities aren’t unheard of.

Wave A{-13} will be followed by a declining wave B{-13}, and then an upward wave C{-13}, which will complete the corrective pattern.

I’ve updated the chart.

2:15 p.m. New York time

One more earnings play exit. I exited my short put vertical spread on STT for a loss. The Zacks metric had predicted a negative earnings surprise. In fact, earnings exceeded analyst expectations. I’ve updated the trade analysis with full results.

1:35 p.m. New York time

Earnings plays: One exit, two entries. I’ve exited my short bull put vertical spread on C a day after entry for 53.9% of maximum potential profit and have updated the trade analysis with full results.

I’ve entered two bear call vertical spreads today, both using options that expire on August 19. I’ve posted a trade analysis on each: GS and SYF.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to rise overnight following yesterday’s low, 3723.75, reaching into the mid-3800s.

What does it mean? The low marked the end of the first leg of the downtrend that began on July 8 and the beginning of an upward correction that is in its early stage.

What are the alternatives? I have none at this point, as is common early in a trend.

[S&P 500 E-mini futures at 3:30 p.m., 105-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, the rise from yesterday’s low is wave 4{-12}, an upward correction within downtrending wave 5{-11}, which began on June 28. Fourth waves often take the form of a Flat with three internal waves. The A and B waves have three internal waves, and the C wave has five waves internally.

Wave 5{-11} parent, downtrending wave 3{-10}, began on June 2, and the 3rd wave’s parent, downtrending wave 5{-9}, began on May 30. The next wave higher is downtrending wave 5{-8}, and the still higher degrees are listed in the “We Are Here” section, below.

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 15, 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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