Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has traded in a narrow range during the session, sticking close to the 38.2% Fibonacci retracement level, in the 4730s on the futures. The analysis is unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to fluctuate around the 38.2% Fibonacci retracement level in overnight trading, hitting a low of 4118.

What does it mean? The downward correction that began on August 16 continues and is in the first of three legs. In my experience, three Fibonacci retracement levels are most likely to be pause or reversal points in retracements: The 38.2% level, the 50% and the 61.8%.

What is the alternative? So far it’s unclear whether this pause will turn into a reversal or not. The low is within the correction’s target range. If it’s a reversal, then the second (middle) leg of the correction will begin, or has begun already.

[S&P 500 E-mini futures at 3:30 p.m., 100-minute bars, with volume]

What does Elliott wave theory say? The downward correction, wave 4{-11}, began on August 16 from 4370.50. Internally, it is its 1st wave, A{-12}. Under the principal analysis, wave A{-12} has more downside ahead of it. Under the alternative analysis, wave A{-12} ended at the overnight low, 4118, and wave B{-12} has begun its rise.

Fourth wave corrections tend to end within the 4th subwave of the preceding 3rd wave — that is, within the 4th wave of the wave that’s being corrected. Wave 4{-12} within wave 3{-11} went from 4147.25 down to 4080.50, and that’s the target range for the wave 4{-11} correction.

This is all happening within wave 3{-10}, an uptrend that began July 14 from 3723.75. In the larger picture, the S&P 500 is in a downtrend, wave 4{-1}, which began on January 4 from 4818.64.

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 23, 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.

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at