Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell to 4103.75 during the session and then rose back into the 4150s. No change in the analysis. I’ve updated the lower chart.

9:35 a.m. New York time

What’s happening now? This morning’s brief whipsaw in the S&P 500 E-mini futures when the latest inflation numbers were released carried the price down to 4132, and then up to 4186.50, before returning the price to its starting point in the 4150s, from which point it less dramatically drifted lower. The consumer price index rose 0.5% in January, far more than December’s 0.1% rise. Annualized, January was a 6% rise compared to December with a 1.2% rise.

What does it mean? The upper boundary of the swing remained below 4208.50, the high point so far in the upward correction that began on October 13, 2022. A move above that level would have confirmed that the final segment within the final leg of the correction is now underway. But that confirmation wasn’t forthcoming, and the internal structure of that final structure suggests that it is not yet complete. (See the upper chart below.)

What is the alternative? The upward correction ended at the February 2 high, 4208.50, and the largely declining price movements since have been the first tentative steps a downtrend that will reach 3502 and likely much lower.

Chart notes. The upper chart is a close-up chart showing the end game of the upward correction. The lower chart shows the correction in its entirety. On both charts, as is always the case with Elliott wave analysis, subwaves of corrective waves are labeled with letters and of trending waves, with numbers. The waves form a fractal structure — smaller waves within larger waves which in turn are within still larger waves. I show a wave’s place in the fractal hierarchy with a numerical subscript, between curly brackets. The smaller the number, the lower down the hierarchy the wave is.

[S&P 500 E-mini futures at 9 a.m., 30-minute bars, with volume]

[S&P 500 E-mini futures at 3:30 p.m., 5-hour bars, with volume]

What does Elliott wave theory say? These are the waves that are the basis of the analyses.

Principal analysis:

  • The upward correction, wave 2{-7}, continues.
  • It is in the third of three parts, upward wave C{-8}…
  • … which in turn is in its third and final subwave, rising wave C{-9}.
  • Wave C{-9} has five subwaves and is in the fourth, declining wave D{-10}.
  • Wave D{10} will be followed by rising wave E{-10}
  • A wave in wave E{-10}’s position normally will exceed the endpoint of the prior upward wave, 4208.50, which is wave C{-10}. That peak was attained on February 2.
  • The end of the wave E{-10} will also be the end of waves C{-9}, C{-8} and of the upward correction, wave 2{-7}.
  • Wave 3{-7} will follow, a powerful downtrend that will carry the price below the starting point of the correction, 3502, and most likely significantly below that level.

The big question today is, has wave D{-10} ended? The Elliott wave literature is curiously silent on what happens within a C wave. I chose to count it as having five waves internally, within the fifth wave, D{-11}, still underway. But there are alternative counts possible. For the time being, I shall leave the chart as it has stood for the past few days, until…

  • … a breakout above 4208.50 — the end of rising wave C{-10} — confirms that wave E{-10} is underway,
  • … or below the low point so far of wave D{-10}, 4060.75 — the end of falling wave C{-11} — confirming that D{-10} is still underway.


  • The upward correction, wave 2{-7}, ended on February 2 at 4208.50 and downtrending wave 3{-7} is now underway.

All analyses:

  • This is all happening within wave 3{-6}, which began on August 16, 2022.
  • Wave 3{-6} is encompassed by a series of larger waves, the smaller within the larger, stretching up five degrees to wave 4{-1}, which began on January 4, 2022.
  • Wave 4{-1} is the next-to-the-last wave within a large expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018.

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)
  • S&P 500 Futures and index:
  • 4{-1} Minor, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-2} Minute, 1/4/2022, 4808.25 (down)
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down)
  • 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)

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, February 14, 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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