Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has pushed higher during the session, reaching the 3980s on the futures as the closing bell approached. No change in the analysis. A downtrend, wave 3{-9}, began on January 17 and internally is in the midst of an upward correction.

The alternative analyses have the larger upward correction, waved 2{-9}, as still underway, and the higher the prices rises, the more likely one of the alternatives is correct.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range overnight, from the 3910s to the 3930s

What does it mean? Internally, the downtrend that began on January 17 is in a small upward correction, which will soon be complete and will be followed by further decline.

What are the alternatives? Unchanged from yesterday, both alternatives assume that the upward correction that began on December 19, 2022 is still underway.

  • Alternative #1: The final wave of the upward correction continues, and the decline that began on January 17 is a downward movement within the correction.
  • Alternative #2: The correction is taking a compound form, containing two or three corrective patterns. The first corrective pattern ended on January 17, and a second pattern will begin once the present decline, linking the two patterns, is complete.

[S&P 500 E-mini futures at 3:30 p.m., 90-minute bars, with volume]

What does Elliott wave theory say? Directional movements in Elliott wave analysis are called “waves”. The placement of a wave within the fractal hierarchy of a stock chart is the wave’s “degree” and is shown after the wave number or letter as a subscript, in curly brackets, showing degree number.

Here are the waves associated with the principle analysis and the alternatives.

Principle analysis:

  • The downtrend that began on January 27 is wave 3{-9}.
  • Internally it is in wave 1{-10}, which in turn is in an upward correction of smaller degree.

For both alternatives, the upward correction still underway is wave 2{-9}, which began on December 19, 2022.

  • In Alternative #1, the decline is a downward wave within wave E{-10}, the final subwave within wave 2{-9}.
  • In Alternative #2, the decline is wave X{-10}, connecting the first corrective pattern within wave 2{-9} with a second corrective pattern that will follow.

Both the principle analysis and the alternatives are subwaves of wave 1{-8}, which began on December 13, 2022 as the initial subwave of wave 3{-7}, which began on that same date.

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)
  • 3{-7} Minuscule, 12/13/2022, 4110 (down)
  • 1{-8} Subminuscule, 12/13/2022, 4110 (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, January 20, 2023


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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