Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 resumed its climb, reaching 4327.50 on the futures. The uptrend that began on August 9 continues, confirming this morning’s principal analysis. In Elliott wave analysis terminology, wave 5{-13} and its enclosing waves two degree up on the fractal structure, waves 5{-12} and 3{-11}, are still underway. I’ve updated the chart.

10:20 a.m. New York time

HD earnings play exit. I’ve exited my short bull put options spread on HD for 27.8% of maximum potential profit, above my 25% minimum goal, and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined slightly overnight, remaining in a narrow range below yesterday’s high, 4304.75.

What does it mean? The possibilities today are the same as they were yesterday. Under my principal analysis, the uptrend that began on August 9 is still underway, within a larger uptrend that began on July 14. The price will soon reverse and rise above yesterday’s high.

What is the alternative? It’s also possible that yesterday’s high ended the rise that began on August 9, and the subsequent shallow decline is the first, tentative step in what will become a larger decline.

[S&P 500 E-mini futures at 3:30 p.m., 80-minute bars, with volume]

What does Elliott wave theory say?

Under the principal analysis, wave 5{-13}, which began on August 9, is still underway. It is a subwave of wave 5{-12} within wave 3{-11} within wave 3{-10}, the last and largest parent wave having began on July 14 from 3723.75. The end of wave 5{-13} will also mark the end of wave 5{-11} and of 3{-10}. It will be followed by a downward correction, wave 4{-10}, which will take back a portion of the rise from July 14, When complete, wave 4{-10} will be followed by wave 5{-10}, which likely will carry the price above the wave 3{-10} peak.

This is all happening within uptrending wave 1{-9}, which began on June 17, within a much larger downward movement, wave 4{-1}, which began on January 4 from 4818.62.

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 16, 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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