Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The downtrend that began yesterday from 3833 continued to fall during the session, reaching 3660.25 as the closing bell approached. The downtrend its middle segment, the 3rd wave, which is generally the most powerful of a five-wave trend. In Elliott wave terms, smaller to larger, wave 3{-14} within wave 5{-13} within wave 5{-12} is underway,

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

1:05 p.m. New York time

Bearish entry on LVS. I’ve entered a bear call vertical spread on LVS, using options that trade for the last time on October 21 and have posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell in overnight trading, reaching the mid-3710s.

What does it mean? The decline is a resumption of the downtrend that began on September 20. The downtrend is presently in its fifth and final segment.

What are the alternatives? None at present. Ambiguities will develop, I’m sure.

[S&P 500 E-mini futures at 3:30 p.m., 35-minute bars, with volume]

What does Elliott wave theory say? Downtrending wave 5{-13}, which began from yesterday’s peak, 3833, is underway. It is a subwave of wave 5{-12}, which began on September 20 from 3936.25. The starting point of wave 5{-13} was also the end point of an upward correction, wave 4{-13}.

When wave 5{-13} is complete, it will also mark the end of wave 5{-12}, its wave 5{-11} parent and above that, its wave 3{-10} grandparent, which began on September 13 from 4051.25. Wave 3{-10} will be followed by an upward correction, wave 4{-10}.

Fourth waves typically end in the 4th subwave of the preceding 3rd wave of the same degree. Wave 4{-11} within wave 3{-10} began on September 13 from 3938.30 and ended on September 15 at 3977.50. The correction hit a lower of 3929, giving a target range for the futures wave 4{-10} of 3929 to 3977.50. Fourth waves don’t always turn out that way, but they do often enough to take that tendency seriously.

If wave 4{-10} were to begin right now (it won’t), the minimum rise would be 5%.

Above the present wave 3{-10} are a series of nested downtrending waves, each of increasing size, from waves 1{-9} up to wave 4{-1}, which began on January 4 from 4818.62. Enclosing them all is wave 5{0}, an expanding Diagonal Triangle that began on December 26, 2018, from 2346.58. In this case, the Triangle constitutes the form of an uptrending wave, and when it is complete, it will be followed by a much larger downtrend than anything we’ve seen since for a long while.

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)
  • 3{-6} Submicro, 8/16/2022, 4325.28 (down)
  • 1{-7} Minuscule, 8/16/2022, 4325.28 (down)
  • 5{-8} Subminuscule, 9/13/2022, 4175 (down)
  • 1{-9} (no name), 9/13/2022, 4175 (down)
  • 3{-10} (no name), 9/13/2022, 4051.25 (down)
  • 5{-11} (no name), 9/15/2022, 3977.50 (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, September 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.

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