Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose again after the overnight decline, remaining below Monday’s high, 4147.50, on the futures. No change in the analysis. The upward correction, wave 4{-12}, continues. I’ve updated the chart.

1:25 p.m. New York time

AMD earnings play entry. I’ve entered a bull put vertical spread on AMD, using options that trade for the last time on September 16, and have posted a trade analysis.

10:20 a.m. New York time

MOS earnings play exit. I’ve exited my bull put vertical spread on MOS for 49.4% of maximum potential loss and have updated the trade analysis with results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to move lower at a leisurely pace, reaching down into the 4080s.

What does it mean? Under my principal analysis, the upward correction that began on July 14 is still underway and internally is in the third leg of a three-part corrective pattern. The reversal is a correction within the third leg and will be followed by a rise above Monday’s high, 4147.25. Afterward, the price will fall back into the 3700s or lower.

What are the alternatives? The further the price falls, the more likely it is that the alternative analysis matches the chart: The upward correction ended on Monday at 4147.25. The downtrend has resumed and will carry the price back to the 3700s or lower.

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

What does Elliott wave theory say? Nothing new. The chart is singing the same tune it has sung for the past few days.

The upward correction that began on July 14, wave 4{-12} is still underway and is in the third wave, C{-13}, of three-wave corrective pattern. If wave 4{-12} forms a simple structure, containing one corrective pattern, then wave C{-13} will mark the end of wave 4{-12} and the correction. Wave 5{-12} to the downside will follow, resuming the downtrend that began on June 8, wave 5{-11}.

If wave 4{-12} forms a compound pattern, then wave C{-13} will be followed by a connecting wave, X{-13} and then a second corrective pattern. A compound correction can contain as many as three corrective patterns. Once the compound correction is over, wave 5{-12} to the downside will begin.

The alternative analysis says that wave 5{-12} began on Friday, from the day’s high, 4147.25. That high was where wave C{-13} and its parent, wave 4{-12}, both ended.

This is all happening within downtrending wave 5{-11}, which which is nested within a series of over larger waves, like Russian matryoshka dolls, as listed below in the “We Are Here” section.

Credit:Russian-Matroshka_no_bg.jpg: User:Fanghongderivative work: Greyhood (talk) – Russian-Matroshka_no_bg.jpg, CC BY-SA 3.0,

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, August 2, 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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