3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures reached a session high in the 4420s, continuing the rise that began overnight with the release of new inflation numbers. There’s no change in this morning’s analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose slightly overnight to slightly above 4400, whipsawed when the latest inflation numbers were released, and then continued to rise, reaching 4415.50 before the opening bell.

What does it mean? The rise since March 12, the third subwave of the first segment of the upward correction that began on October 13, has carried the price well above the 61.8% Fibonacci retracement level, a common reversal point, and about halfway to the next Fib level, 78.6%. (The waves’ labels on the chart, from smaller to larger, are C{-8} within A{-7} with the correction, wave 2{-6}).

I’ve overlaid the chart with the Fibonacci retracement ladder, in red.

Under the rules of Elliott wave theory, the 2nd wave upward correction cannot move above the starting point of the declining 1st wave that preceded it. The upper boundary is 4808.25, which gives the correction about 400 points within which it can rise.

What are the alternatives? At a glance it seems possible to count the subwaves of the correction differently, divided the rise from October into three waves one degree down from the corrective wave. However, this doesn’t work but it would have the middle subwave (B) moving above the starting point of initial subwave (A), and that breaks a rule of Elliott wave theory.

So at this point, I have no alternatives. They will develop, I’m quite certain, as the correction progresses.

[S&P 500 E-mini futures at 3:30 p.m., 800-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the revised analyses.

Principal analysis:

• An upward correction, wave 2{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, is underway and will have five subwaves.
• Wave A{-7} at present is in its 3rd subwave, wave C{-8}.
• Wave C{-8} is in its 3rd subwave, wave C{-9}.
• Wave 2{-6}, when complete, will be followed by a powerful downtrend, wave 3{-6}.
• Under the rules of Elliott wave analysis, wave 2{-6} cannot move beyond the beginning of wave 1{-6}, which was the January 4, 2022 peak at 4808.25.

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)
• 2{-6} Minuscule, 10/13/2022, 3577.75 (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, June 13, 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.