3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures reached a high of 4189 early in the session and then declined back into the 4140s. Wave E{-10} within wave C{-9} within the upward correction, wave 2{-8}, is still underway. Or perhaps not. The 4189 peak may well be the end of the correction and the start of a downtrend, wave 3{-8}. Given the 4208.50 upper limit for the correction under the rules of Elliott wave analysis, 4189 is a reasonable end point. Yet wave E{-10} ought to have five internal waves, and I find the count to be a bit ambiguous. So I’m holding to this morning’s scenario for now and will await with interest what Monday brings. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose back into the 4170s as the opening bell approached,

What does it mean? The same as yesterday: The upward correction that began March 13 is nearing its end. An energetic downtrend will follow. At this point any high could be the end of the correction. The correction high so far is 4177.75, attained on April 12.

What are the alternatives? It’s possible that the April 12 high was the end of the correction and the tentative first steps of the downtrend are underway

It’s also possible that the correction is forming a compound structure, linking two or three corrective patterns together. If that’s the case, then the end of the 3rd wave within the correction will be followed by a downward linking wave, and then a second corrective pattern.

[S&P 500 E-mini futures at 3:30 p.m., 140-minute bars, with volume]

What does Elliott wave theory say? Here is a discussion of waves important to the analysis.

Principal analysis:

• The upward correction that began on March 13 is wave 2{-8}.
• Within it, wave C{-9}, the correction’s final wave of that degree, is in its final wave, rising wave E{-10}.
• Wave E{-10} will likely rise above the preceding wave D{-10}’s starting point, 4l71.25, but under a rule of Elliott wave analysis, cannot move above the starting point of the wave 2{-8} correction itself, 4208.50.
• Down one degree, wave C{-9} is the final wave within that correction.
• If wave 2{-8} and its subwaves, C{-9} and E{-10}, move above the starting point of wave 1{-8}, which was 4208.50, then then analysis will have broken a rule of Elliott wave analysis and a new analysis will be done.
• Wave 2{-8} will be followed by a downtrend, wave 3{-8}, that will carry the price below the correction’s starting point, 3839.25, and most likely significantly below that level.

Alternative analysis #1:

• Wave E{-10} and its parent, wave C{-9}, ended at the April 12 peak, bringing the upward correction, wave 2{-8} to an end.
• Downtrending wave 3{-8} is underway.

Alternative analysis #2:

• Wave 2{-8}, the upward correction, will form a compound structure, linking together two or three corrective patterns.
• Under that alternative, if it should occur, the present rising wave C{-9} will be followed by a declining connector wave, X{-9}, and then the first wave of a second corrective pattern.
• The correction is a 2nd wave, and compounding is seen less often in 2nds. However, they do happen on occasion.

Bigger structures:

• This is all happening within downtrending wave 3{-7}, which began on February 2.
• Wave 3{-7} is a subwave of downtrending wave 3{-6}, which began on August 16, 2022.
• Wave 3{-6} is encompassed by a series of larger declining 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 back to the upper boundary of the triangle, which gets higher continually and is in the 6090s.

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.

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, April 14, 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.