Trader’s Notebook, PM

Note: This morning’s post won’t allow me to update it. So, here’s a separate closing bell analysis.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose during the session, reaching 4110, moving through five waves.

Why does it matter? The final leg of the upward correction has traced five waves internally and may well have reached its end. If that proves to be the case, then the subsequent decline is the first step in what will become a powerful decline.

What is the structure? The rise that began on November 29 is the 5th and final subwave within the final wave of the upward correction that began on October 13. The rise was quite rapid. In Elliott wave terminology, it is wave 5{-9} within wave {-8}, the third wave within the correction, wave 2{-7}.

The five-wave structure within wave 5{-9} shows clearly on a chart with 10-minute bars. The subwaves are of the {-10} degree.

[S&P 500 E-mini futures at 1:40 p.m., 10-minute bars, with volume]

I’ve labeled the chart as through wave 5{-9} and it’s final wave, 5{-10} were complete. But are they really?

A major ambiguity within Elliott wave analysis is assigning waves to the correct degree within the whole fractal structure. The decline on this chart, which I’ve labeled as wave 3{-7}, the major downtrending wave, could in fact be a subwave within wave 5{-10}, at a smaller degree. If that proves to be the case, then expect a reversal and a move above 4110.

By Tim Bovee, Portland, Oregon, December 1, 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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