Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose during the session, from the low 3900s to a high of 3977.25, which is 13 points above the overnight high. The alternative analysis proved to be correct: Wave A{-13} within wave 4{-12} is still underway. This switch is the upward version of bottom fishing, where a trader tries to figure out where a trend has ended and has hit a false call. A reversal to the downside will trigger a return to this morning’s principal analysis, that wave A{-13} is over and B{-13} has begun, with a higher A-wave end point than this morning. I’ve updated the chart.

12:50 p.m. New York time

AN earnings play entry. I’ve entered short bull put vertical spread on AN, 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 reached an overnight high of 3964.25 and then reversed.

What does it mean? The high marks the end of the first leg of an upward correction that began on July 14.

What is the alternative? It’s possible that the high marked the end of a subwave within the first leg of the still incomplete correction.

[S&P 500 E-mini futures at 3:30 p.m., 115-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, the first leg, rising wave A{-13| of the upward correction, wave 4{-12}, has completed five waves internally, meaning that wave 4{-12} is taking the form of a Zigzag. Falling wave B{-13} has begun and will have three waves internally. This scenario means that the potential over the next few days is mainly to the downside.

Wave B{-13} will be followed by rising wave C{-13}, which will complete the correction, unless it takes a compound form, linking two or three corrective patterns together. In that latter case, wave C{-13} will be followed by a falling connector wave, X{-13}, and then a second corrective pattern.

Under the alternative analysis, wave A{-13} is not yet complete and wave B{-13} hasn’t yet begun. This scenario means that there is more upside potential in the next few days.

Wave 4{-12} and its subwaves are all happening within wave 5{-11}, which began on June 28, which in turn is a subwave of wave 3{-10}, which began on June 2 and is a subwave of wave 5{-9}, which began on May 30. They are all subwaves wave 5{-8}, which began on April 21 and is the smallest degree listed in “We Are Here”, below. Wave 5{-8}, in turn, has a series of parent and grandparent waves stretching up to downtrending wave 4{-1}, which began on January 4, and waves of even larger degree, up to uptrending wave 5{+3}, which began on July 8, 1932.

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 20, 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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