3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose rapidly during the session, rising more than 50 points, from 4122 to 4179 and then pulling back slightly.

The rise broke beyond the upper boundary of the triangle, and with that new information, I’ve changed the endpoint of wave D{-9} from May 10 to the May 16 low, 4120. The breakout carried the price above the preceding C-wave peak, 4161, but remains below the preceding A-wave peak, 4206.25, (I’ve corrected the price labeling both of those peaks on the chart.)

Wave E{-9} is the final wave of wave E{-8}, which in turn is the final wave within wave C{-7}, which is the last wave of the upward correction that has been underway since October 13, 2022.

Typically wave E{-9} will move

Bottom line: The end is near.

I’ve updated the chart and the Elliott wave section, both below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to progress through its final phase within the narrow bounds of a triangle structure.

What does it mean? The triangle, which began on May 10, is part of the final segment of an upward correction three levels larger that began on October 13, 2022. The end of the triangle will also be the end of the larger correction and will be followed by a downtrend that will carry the price below the correction’s starting point, 3502, and likely well below that price.

On the chart, I’ve marked the triangle structure now underway with red lines. See the Reading the Chart section below for an explanation of the wave labeling.

What are the alternatives? Unchanged from yesterday. If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses, updated with the afternoon analysis.

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is taking the form of a Zigzag and as expected, has already exceeded the peak of the first subwave of the correction, wave A{-7}, which ended on December 13, 2022 at 4180.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its final subwave, rising wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves E{-8}, C{-7} and of the correction, wave 4{-6}
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 17, 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.

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Based on a work at www.timbovee.com.