3:30 p.m. New York time

Half an hour before the closing bell.

The S&P 500 futures have risen during the session, so far reaching a daily high of 4608.75. That’s $1 below the July 19 peak of the upward correction, 4609.75. If the price moves above 4609.75, then it can be interpreted in couple of ways.

• Either the decline since July 19 was a subwave of rising wave C{-5}, which is still ongoing.
• Or declining wave D{-5} proved to be unusually shallow and wave E{-5} is underway.

As noted in this morning’s analysis, waves of the {-5} degree are the ones that will signal the future course of the upward compound correction that began on October 13, 2022.

Wave C{-5} is the third of five waves within the final subwave, E{-4}, of the last leg, wave C{-3}, of the second corrective pattern within the rising compound correction, wave 2{-2}. Wave E{-4} will have five subwaves at completion

The price as of this writing has remained below the July 19 peak and so this morning’s analysis still stands: Declining wave D{-5} is underway.

I’ve updated this morning’s chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fluctuated between the 4570s and the 4590s overnight, going nowhere. The price remained below the July 19 high, 4609.25, which is slightly below the 78.6% Fibonacci retracement level, which is 4642.68. The Fibonacci ladder is shown on the chart in red.

What does it mean? Spoiler alert: There will be nothing new in this analysis.The second corrective pattern within upward compound correction that began in October continues. The correction is of the {-2} degree. The wave in play, the one that will determine the end of the corrective, is of the smaller {-5} degree and is in its fourth of five waves.

A compound correction can have two or three corrective patterns, so the present pattern, when complete, will either be the end of the correction, or will be followed by another corrective pattern. There’s no way to tell in advance how the correction will play out.

The correction will be followed by a powerful downtrend.

What are the alternatives? It is possible that the {-5} degree is in its rising third wave rather than its declining fourth. There have been several false signals.

[S&P 500 E-mini futures at 3:30 p.m., 260-minute bars, with volume]

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

Principal analysis:

• An upward correction, a Zigzag, wave 2{-2}, began on October 13, 2022 and is underway.
• The upward correction, wave 2{-2}, is taking a compound form, which can contain up to three corrective patterns.
• The correction is in its second corrective pattern, which is in wave C{-3}, its final wave.
• The end of the present wave C{-3} could also be the end of the wave 2{-2} correction if the compound structure contains two subwaves.
• Or the present corrective pattern could be followed by a declining connector, wave X{-3}, and then a third corrective pattern.
• Wave C{-3} will have five subwaves and is at wave E{-4}, the final subwave.
• Wave E{-4} is in its fourth of five subwaves, wave D{-5}.
• Wave 2{-2}, when complete, will be followed by a powerful downtrend, wave 3{-2}.
• Under the rules of Elliott wave analysis, wave 2{-2} cannot move beyond the beginning of wave 1{-2}, which was the January 4, 2022 peak at 4953.25

Alternative analysis:

• Wave E{-4} is in its third of five subwaves, wave C{-5}, a rising wave that will be followed by an downward movement and then a final rise to completion.

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, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 2{-2} Minute, 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, July 25, 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.