Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to decline during the session, with the futures reaching into the 3750s. The greater the decline, the greater the likelihood that the final subwave has begun, within the middle wave the upward correction that began on October 13. I’ve marked it that way on the chart: Wave C{-9} within wave B{-8} within the correction, Wave 2{-7}.

If the wave C{-9} decline moves below 3502, the correction’s starting point, then the October 28 peak was the end of the correction, which is the alternative scenario. Under the principal scenario, that peak was the end of the first subwave within the correction.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded sideways overnight, slightly above a 38% retracement of the downtrend that lasted from August 16 to October 13, and then declined at the opening bell. The price remained below yesterday’s high, 3847, throughout the night.

What does it mean? The upward correction that began on October 13 continues, It is in the middle of three waves forming a Zigzag corrective structure, and that middle wave is in its middle subwave of three.

What is the alternative? The same as it has been for the past few days: The entire upward correction ended at the October 28 peak, which in the principal analysis is the end of the first subwave within the correction. I find this to be an entirely unlikely scenario, but I can’t rule it out entirely, either.

[S&P 500 E-mini futures at 3:30 p.m., 230-minute bars, with volume]

What does Elliott wave theory say? Unchanged from yesterday.. The S&P 500 is in wave B{-9} within wave B{-8} within wave 2{-7}, where in wave 2{-7} is the upward correction that began on October 13, wave B{-8} is the middle subwave within a three-wave Zigzag corrective pattern, and wave 2{-7} is an upward correction.

The structure is part of wave 3{-6}, a downtrend that began on August 16 from 4327.50 on the futures. When the correction is over, wave 3{-7{ will carry the parent wave significantly lower.

Wave 3{-6} is enclosed by a series of nested 1st waves of increasing size, up to wave 1{-2}, a subwave of wave 4{-1}, the fourth of five waves within an expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018. When wave 4{-1} is complete, it will be followed by uptrending wave 5{-1}, which will most likely carry the price above the January 4 starting point of wave 4{-1}, 4818.62 on the index.

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, 4327.50 (down)
  • 2{-7} Minuscule, 10/13/2022, 3502 (up)
  • B{-8} Subminuscule, 10/28/2022, 3924.25 (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, November 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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