Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures declined during the session, falling below the starting point of this morning’s rapid rise. It’s possible that the pre-opening high, 4180, marks the end of the upward correction that began on October 13, but it might not be. I’ll leave the labeling as it was this morning and keep a close eye on the chart patterns. For now, the principal anqlysis is, the upward correction, wave 2{-7}, is underway and is in its their and possibly final subwave, C{-8}, which in turn is in its fifth and final subwave, 5{-9}.

9:35 a.m. New York time

What’s happening now? When November’s inflation numbers were published before the opening bell, the S&P 500 E-mini futures rose 90 points in a single minute, to 4180, and then in several minutes that followed pulled back by 80 points.

What does it mean? The rapid rise brought the price well above the previous peak since an upward correction began on October 13, disqualifying the previous principal analysis and replacing it with yesterday’s Alternative #3: The first corrective pattern within the upward correction is still underway. It is in its third and final subwave.

What are the alternatives? At this point there are none, except the fact that any new peak is a possible end to the correction, although it’s not a certainty.

[S&P 500 E-mini futures at 3:30 p.m., 2-hour bars, with volume]

What does Elliott wave theory say? In line with the major revision to the analysis, these are the waves that I’m watching closely.

  • The upward correction, still underway, is wave 2{-7}.
  • It is in its third internal wave, rising wave C{-8}.
  • Wave C{-8} is in its final phase, rising wave 5{-9}.

The end of wave 5{-9} will also be the end of waves C{-8} and perhaps 2{-7}. At that point, one of two things will happen:

  • Wave 3{-7}, a downtrend, will begin, carrying the price a significant distance below current levels.
  • Or, wave 2{-7} will form a compound structure, containing two or three corrective patterns. After wave C{-8} is complete, a connecting wave, X{-8}, will carry the price down a bit before the second corrective pattern begins.

This is all happening within wave 3{-6}, a downtrend that began on August 16 from 4327.50. That downtrend is a subwave of wave 1{-5}, which began on January 4 from 4808.25.

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, December 13, 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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