Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P500 has traded in a narrow range during the session, with the futures rising from the early session low, 4005.25, back into the 4040s. The upward correction that began on December 22, 2022 continues, and the price has remained below the correction’s high, 4056.75, attained on January 23. I’ve updated the chart below

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 a low so far of 4012.25.

What does it mean? An upward correction that began on December 22, 2022 from 3785.50 continues and is in its first leg.

What are the alternatives?

Alternative #1: The first leg of the correction ended on the January 23 high, 4056.75, and the second leg has begun.

Alternative #2: The first leg ended on the January 17 high, the second leg on the January 18 low. Under this scenario, the final leg of the correction is either underway or ended today.

[S&P 500 E-mini futures at 3:30 p.m., 4-hour bars, with volume]

What does Elliott wave theory say? Here are the waves I’m tracking today for the principal analysis.

  • The upward correction that began on December 22, 2022 is wave 2{-9}.
  • That wave is in its first subwave, wave A{-10}.

Under Alternative #1,

  • Downward wave B{-10} within the upward correction, wave 2{-9}, is underway.

Under Alternative #2,

  • Wave B{-10} within the upward correction ended at the January 18 low.
  • The final wave of the correction, upward wave C{-10}, is underway.

Under all three analyses,

  • All of that is happening within downtrending wav 1{-8}.
  • The downtrend is a subwave of a series of larger downtrends, reaching in size up to wave 4{-1}, which began on January 4, 2022 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)
  • 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 24, 2023

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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