Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose throughout the day, with the futures reaching into the 4070s. The final leg of the upward corrective pattern that began on July 14 is still underway. In Elliott wave terminology, the correction is wave 4{-12}, and internally, it is in wave 3{-13}, the middle wave of a five-wave series. Third waves tend to be the strongest of the series, and today’s powerful push certainly illustrates that fact.

No change in the analysis. I’ve updated the chart below.

10:45 a.m. New York time

AAPL earnings play entry. I’ve entered a short bull put vertical spread on AAPL, using options that trade for the last time on August. 19, and have posted an analysis of the trade.

10:20 a.m. New York time

CHRW, EQT earnings plays exits. I’ve exited two short bull put vertical spreads, a day after entering the options positions, and have updated the analyses with full results. The trades were on CHRW and EQT.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined slightly overnight, rising slightly at the opening bell.

What does it mean? The pull back is the first of two within the rising final leg of an upward correction that began on July 14.

What is the alternative? It’s possible that the first leg of the correction is still underway. The higher the price rises today, the less likely the alternative will be.

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

What does Elliott wave theory say? Under the principal analysis, the upward correction, wave 4{-12}, is in its final segment, wave C{-13}. The C wave will have five waves internally, and I’m counting the overnight pullback as the second of those five waves.

Under the alternative analysis, the correction’s first wave, A{-13}, is still underway, and the pullback from July 22 and the subsequent rise are movements within that wave. The higher the price moves, the less proportional internal structure of wave A{-13} becomes and the less likely it is that the alternative analysis will match the chart.

In any case, wave C{-13} will most likely mark the end of the wave 4{-12} correction. If the correction forms a compound structure, linking two three corrective patterns together, then wave 4{-12} will have longer to go before reaching its end.

Wave 4{-12} will be followed by a resumption of the downtrend, wave 5{-11}, that began on June 28, in the form of wave 5{-12}, which will likely carry the price into the 3600s or 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)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (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 x, 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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