Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 E-mini futures, 4 minutes before the opening bell, reached a low for the day of 3912.50, thereafter rising during the session into the low 3960s and then resuming the decline.

No change from this morning’s analysis. The rising final wave within an upward correction that began on October 13 is still underway, and internally, it is in a declining next-to-the-last wave. In Elliott wave analytical terminology, declining wave B{-9} within rising wave C{-8} within the upward correction, wave 2{-7} is underway.

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 fall in overnight trading, reaching into the 2910s.

What does it mean? The next-to-the-last wave within the final wave of an upward correction that began on October 13 has begun its decline from Monday’s high, 4050.75.

What are the alternatives? None at present. I’m sure some will develop. They always do.

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

What does Elliott wave theory say? Declining wave D{-9} within rising wave C{-8}, both within the rising correction, wave 2{-7}, are underway. Wave D{-9} has so far reached returned to the 50% Fibonacci retracement level, 3914.75, falling from just beyond the 61.8% retracement level.

Wave 2{-7} has taken the form of a Zigzag, with five subwaves within the first of the three waves. In a Zigzag (and also a Flat), the third wave in a correction also has five subwaves. Presently, the 4th of those five subwaves is underway, wave D{-9}.

Wave D{-9} will be followed by the final subwave, wave E{-9}, which will mark the completion of wave C{-8} and of the upward correction, wave 2{-7}.

The C wave with within a Zigzag is often about the same length as the A wave. The length of wave A{-8} was 422.25. Wave C{-8} began at 3704.25. So the Wave C{-8} endpoint typically would be around 4126.50, about 127 points above Monday’s high, 4050.75, almost reaching the 78.6% Fibonacci retracement level.

So what comes next? Wave 2{-7} will be followed by wave 3{-7}, a powerful decline that will almost certainly carry the price into the 3400s and perhaps significantly lower, completing the parent wave 3{-6}, which began on August 16 from 4327.50.

As a trader, I’m looking at it this way: I’ve got a bit of a down, a bit of an up, and then a big, big down.

Wave 4{-6}, an upward correction, will follow the energetic 3rd wave decline.

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)
  • C{-8} Subminuscule, 11/3/2022, 3704.25 (up)

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 17, 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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