Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. As the closing bell approached, the S&P 500 futures had fallen into the 4070s as the downtrend that began April 18, wave 3{-8}, continued. The downtrend is expected to carry the price into the 3830s and below, with the usual ups and downs that mark any trend. No change from this morning’s analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures held steady in the 4110s after yesterday’s close and then in the early morning hours fell to 4089.25, ending a low-degree downtrend within a series of larger downtrends. That smaller downtrend has now begun an upward correction.

What does it mean? The downtrend that began on April 18 continues and is nearing the end of its first segment, which is a smaller downtrend. The end of the smaller downtrend will also be the end of the larger downtrend and will be followed by a larger upward correction.

What are the alternatives? It’s possible that the waves within the April 18 downtrend are larger, or smaller than I’ve labeled them.

I’ve discontinued the two alternatives that were noted in Trader’s Notebook through yesterday’s analysis. They have had a shrinking probability since April 18, and I no longer think there’s a serious chance that they’ll be the occur. The odds are still greater than zero, but by much.

Those two alternatives were that the last segment of the March 13 upward correction had not yet ended, or that the compound correction as forming a compound structure, containing two or three corrective patterns.

Both are off the table, in my opinion.

[S&P 500 E-mini futures at 3:30 p.m., 17-minute bars, with volume]

What does Elliott wave theory say?

Here’s a description of the waves that underly the analysis.

Principal analysis:

  • The downtrend that began on April 18 is wave 3{-8}.
  • Within it, wave 1{-9}, the first of five waves, is underway.
  • Wave 1{-9} internally is in its final wave, 5{-10}.
  • Wave 5{-10} in turn is in its next-to-the-last wave, upward wave 4{-11}.
  • Wave 4{-11} will be followed by a push to the end as wave 5{-11}
  • The end of wave 5{-11} will also be the end of waves 5{-10} and 1{-9}
  • The most energetic part of the downtrend, wave 3{-9}, lies ahead.
  • Wave 3{-8} will carry the price below the starting point, 3830.25, of wave 2{-8}, the upward correction that began on March 13 and ended on April 18. Most likely the price will decline significantly below that level.

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 26, 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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One thought on “Trader’s Notebook

  1. […] Reading the chart. I adjusted the chart numbering to avoid a rule of Elliott wave analysis that forbids a 3rd wave being the shortest downward wave in a downtrend, changing the endpoint of waves 1{-10} and 2{-10} to earlier, and the end of waves 3{-10} and 4{-10} to later. The prior numbering can be seen in yesterday’s Trader’s Notebook. […]


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