Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures, in an upward correction, moved above the March 12 high, and I’ve done a recount that better matches the chart as it has developed. It also takes care of the risks identified in the alternative analysis, which cast doubt on the relative size of the waves as labeled.

I’ve retained this morning’s chart. The chart higher up in the page is this afternoon’s reanalysis.

Here are the changes. I’ve taken {-15} degree waves and moved them up to {-14}. Having done so, then wave 3{-14} ended on March 13 at 3839.25. The rise that followed is an upward correction, wave 4{-14}. Internally, it is in falling wave B{-15} the second of three waves.

There is no change in the higher degrees. What I’ve described above are subwaves of wave 1{-13}, which in in turn a subwave of wave 5{-12}, which began on March 6.

The revised chart:

[S&P 500 E-mini futures at 3:30 p.m., 100-minute bars, with volume]

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures swung wildly after new inflation figures were announced, rapidly moving between the 3880s and the 3930s before settling down about where the price had been prior to the data release. Prices rose at the opening bell.

What does it mean? The downtrend that began on March 6 continues and in its subwaves is also in a downtrend. At a very low degree, the price is in an upward correction. A rise above 3971.50 would require a recount.

What are the alternatives? The placement of the waves within the March 6 downtrend, relative to the parent wave, remains uncertain. They could be one level higher in size relative to the downtrend.

[Outdated analysis: S&P 500 E-mini futures at 9:35 a.m., 100-minute bars, with volume]

What does Elliott wave theory say? Note: This is section was based on this morning’s analysis, which has been updated. See the “Half an hour before the closing bell” section, above, for the new analysis. I’ll update this section for the March 15 Trader’s Notebook.

Here are the Elliott waves that form the basis of my analysis, unchanged from yesterday.

Principal analysis:

  • The downward correction that began on February 2, wave 3{-7}, continues.
  • It is in the first of five subwaves, wave 1{-8}.
  • Within wave 1{-8}, wave 1{-9} is underway and is in the final subwave within a five-wave structure, downtrending wave 5{-10}.
  • Wave 5{-10}, in turn, is in its middle wave, 3{-11}, which is in its final wave, 5{-12}..
  • The end of wave 5{-12} will also be the end of wave 3{-11}, a subwave of downtrending wave 5{-10}.
  • When wave 5{-10} is complete, it will also mark the end of wave 1{-9} and the beginning of a low-degree upward correction, wave 2{-9}.
  • Within wave 5{-12}, downtrending wave 1{-13} is underway and internally is in wave 5{-14}, its final wave.
  • Wave 5{-14} is in its middle wave, 3{-15}.
  • Wave 3{-15} internally is in an upward correction, wave 2{-16}. If that 2nd wave correction moves beyond the starting point of the preceding downtrending wave 1{-16}, then it will have violated a rule of Elliott wave analysis, and a recount will be necessary. Wave 1{-16} started at 3971.50.
  • Wave 3{-13} will be followed by an upward correction, wave 4{-15}, and then a final downtrending wave 5{-15}
  • When complete, wave 5{-15} will complete wave 5{-14}, which will mark the end of wave 1{-13} and the start of an upward correction, wave 2{-13}.
  • On the chart I’ve posited the current price at wave 5{-14} within wave 1{-13}, which in turn is the first wave within wave 5{-12}.
  • Wave 3{-7} is still taking its tentative first steps and will develop into a powerful downtrend that will carry the price below 3502, the starting point of the preceding upward correction, wave 2{-7}, and most likely significantly below that level.

Alternative analysis:

  • Within wave 5{-12} the subwave degrees are uncertain.
  • The {-13} degrees could be a degree higher, making them waves of {-13} degree within wave 5{-12}.

Bigger structures:

  • 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
  • When wave 4{-1} is complete, wave 5{-1} will begin and will carry the wave above the January 4 high, 4808.25, and into the 6000s, where the present upper boundary of the triangle lies. The expanding part means that each day that upper boundary moves higher.

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)
  • 3{-7} Minuscule, 2/2/2023, 4208.50 (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, March 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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