3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures continued to rise during the session, reaching into the 3980s. Wave E{-16} within wave C{-15} within an upward correction, wave 4{-14} continues. No change in the analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell after trading resumed overnight, reaching a low of 3897.25 and then reversing, returning to the 3960s.

What does it mean? The final wave of an upward correction that began on March 13 continues. Internally, its final subwave is rising to a conclusion. When the correction is complete, it will be followed by a downtrend that will carry the price below 3839.25, the correction’s starting point, and likely significantly below that level.

What are the alternatives? There are three:

Alternative #1: The three-wave correction ended on March 17 at 4009.25, and the subsequent downtrend has begun.

Alternative #2: The initial three-wave corrective pattern within a compound correction ended at the March 17 high. The decline that followed is a connecting wave that will be followed by a second corrective pattern. Altogether, compound corrections can contain up to three corrective patterns.

Alternative #3: The decline that began on March 17 under the principal analysis is a subwave of the larger final wave of the correction. It’s possible that it is possible that the next-to-the-last wave within that subwave is still underway and the final wave has not yet begun.

Reading the chart. Elliott wave analysis views the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. My labeling system assigns numbers to the subwaves of trending waves, and letters to the subwaves of corrections. Each number or letter is followed by a subscript, in curly brackets, showing the waves position within the complex structure, called its “degree” in Elliott wave parlance. The smaller the number, the lower the degree. On this chart we’re dealing with relatively small waves, so the degree numbers are negative.

I’ve moved the chart in to focus on the final wave of a larger downtrend. The final wave, 5{-12}, began on March 6. The downtrend of which it is a subwave, 3{-11}, began on February 15.

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

What does Elliott wave theory say? Wave D{-16} within wave C{-15} within the upward correction, wave 4{-14}, ended at the overnight low. Rising wave E{-16}, the final wave with wave C{-15}, has begun.I t’s completion will bring wave 4{-14} to an end.

Here is a rundown of waves that are important to the analysis.

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 4{-14}, an upward correction.
• Wave 4{-14} is in its final internal wave, C{-15}, which in turn is in its final subwave, E{-16}.
• Wave 4{-14} will be followed by downtrending wave 5{-14}, which will complete its parent, wave 1{-13}
• Wave 1{-13} and the start of an upward correction, wave 2{-13}.
• 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 #1

• Wave C{-15} and its parent, wave 4{-14}, ended at the March 17 peak. Wave 5{-15}, a downtrend, has begun.

Alternative analysis #2

• Wave C{-15} ended at the March 17 peak, ending a corrective pattern. The parent wave 4{-14} is forming a compound correction, and the decline that followed the March 17 peak was a connector, wave X{-15}, and the rise that followed is the beginning of a second corrective pattern, wave A{-15}.

Alternative analysis #3

• Falling wave D{-16} within wave C{-15} within wave 4{-14} is still underway.

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 20, 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

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.