Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has fallen during the session, reaching into the 4110s on the futures. No change in the analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range overnight, declining slightly and remaining below Monday’s high, 4188.

What does it mean? The rise that began on July 14 from 3723.75 continues. Monday’s high may have marked the end of the middle leg of that rise. If so, after a downward correction, the rise will resume. The further the price declines, the more likely it is that the downward correction is underway.

What is the alternative? Monday’s high may have been a stopping point as the middle leg of the rise from July 14 continues. If so, then the overnight decline is a smaller correction and the rise will resume, perhaps today.

[S&P 500 E-mini futures at 3:30 p.m., 70-minute bars, with volume]

What does Elliott wave theory say? The rise from July 14 is wave 3{-10}. Internally, it is in wave 3{-11}, which began on July 18 from 3920.25, which in turn is in wave 5{-12}, which began on August 2 from 4080.50.

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 9, 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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