3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures rose during the session to 4560.75 and then reversed, falling into the 4490s. In the low-degree labels that I added this morning, the decline marked the end of a small upward correction, wave 4{-5}, and the beginning of the final wave of the series, wave 5{-5}.

Implications for two scenarios:

• The scenario that sees today’s decline as a wave connecting the second corrective pattern with a third such pattern within the larger upward compound correction became less likely as a result of today’s fall. The decline is taking the form of five subwaves, and a connecting wave, wave X{-3}, would have three subwaves.
• The scenario that declares the upward correction to have ended at the July 27 high and the downward movement to be the start of a downtrend, wave 3{-2}, became more likely as a result of today’s fall. A trending wave as five subwaves.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose during the earlier hours of the overnight trading, reaching 4547 and then reversed, reaching a low of 4514.25 a few minutes after the latest employment numbers were released. The price remained above yesterday’s low, 4505.75. Shortly after the opening bell. the price exceeded the overnight high, reaching 4548.

What does it mean? Absent new highs or lows, overnight trading did nothing to resolve the ambiguities created when the price retreated from last week’s peak, 4634.50.

What are the ambiguities? Unchanged from yesterday’s Trader’s Notebook. And the analysis that follows is largely unchanged from yesterday’s post.

An upward correction, wave 2{-2} that began on October 13, 2022 has taken a compound form. So far it has produced two corrective patterns.

Within that context, here is an inventory of the ambiguities:

• The decline from July 27 is a subwave of the final wave of the second corrective pattern, which is still underway
  • The lower the price falls, the less likely this scenario becomes.
• The second corrective pattern ended at the July 27 peak and the correction continues.
  • The decline is a wave that will connect the second corrective pattern with a third and final corrective pattern. This is called an X-wave in classical Elliott wave terminology.
• The upward correction ended at the July 27 peak.
  • The decline is the early stage of what will become powerful downtrend that will carry the price below the start of the upward correction, from 3502, and most likely significantly below that level. This would be wave 3{-2}.

The chart below. The chart shows the final subwave, wave C{-3} of the second corrective pattern within the upward correction, wave 2{-2}.

The decline so far has completed three subwaves, which I’ve placed on the chart as waves 1{-5}, 2{-5} and 3{-5}. The degree subscript, {-5}, is only a guess. There’s not enough context to support anything more precise at this point. It’s probably not larger and might be smaller.

[S&P 500 E-mini futures at 3:30 p.m., 165-minute bars, with volume]

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

Known facts:

• 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 has completed its second corrective pattern.

Ambiguities

• Is the July 27 peak the end of wave C{-3} within the correction, wave 2{-2}?
• If wave C{-3} has ended, has wave 2{-2} also ended or will it produce a connector, wave X{-3}, and then move on to wave A{-3}, the first wave of a third corrective pattern?
• If wave 2{-2} has ended, a powerful downtrend, wave 3{-3}, is taking its tentative 1st steps.

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:
• 3{-2} Minute, 7/27/2023, 3502 (down) (tenatively)

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.

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, August 4, 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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures has peeked above 4540 and then withdrawn, so far staying below the overnight high, 4547.50. This morning’s analysis is unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued falling overnight, reaching below 4510 as the session began.

What does it mean? The ambiguities of the week remain in place, with multiple explanations of the meaning of the decline since July 27 peak, 4634.50. The interpretation is happening within the context of a rising upward correction that began on October 13, 2022 and has taken a compound form, so far containing two corrective patterns.

Here are the alternatives:

• The decline is a subwave of the final wave of the second corrective pattern, which is still underway
  • The lower the price falls, the less likely this scenario becomes.
• The second corrective pattern ended at the July 27 peak and the correction continues.
  • The decline is a wave that will connect the second corrective pattern with a third and final corrective pattern. This is called an X-wave in classical Elliott wave terminology.
• The upward correction ended at the July 27 peak.
  • The decline is the early stage of what will become powerful downtrend that will carry the price below the start of the upward correction, from 3502, and most likely significantly below that level. This would be a 3rd wave

The chart below. The chart shows the final subwave, wave C{-3} of the second corrective pattern within the upward correction, wave 2{-2}.

[S&P 500 E-mini futures at 3:30 p.m., 165-minute bars, with volume]

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

Known facts:

• 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 has completed its second corrective pattern.

Ambiguities

• Is the July 27 peak the end of wave C{-3} within the correction, wave 2{-2}?
• If wave C{-3} has ended, has wave 2{-2} also ended or will it produce a connector, wave X{-3}, and then move on to wave A{-3}, the first wave of a third corrective pattern?
• If wave 2{-2} has ended, a powerful downtrend, wave 3{-3}, is taking its tentative 1st steps.

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:
• 3{-2} Minute, 7/27/2023, 3502 (down) (tenatively)

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.

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, August 3, 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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during the session, reaching into the 4530s. No change in this morning’s analysis. I’ve updated the upper chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell from the 4590s into the 4550s overnight, rising back into the 4580s as the opening bell drew nearer.

What does it mean? The decline since last week so far has done nothing to answer the questions posed by the chart: Has the second corrective pattern within an upward compound correction that began in October reached its end, and if so, has a correction itself also ended, or will there there a third corrective pattern?

Each of the questions will have a major impact on the market’s directionality. As for myself, I’m being very cautious about how I place my bets.

In the upper chart, I’ve pulled back for a broader look at the futures, showing the correction’s final subwave, which began on May 4.

The lower chart shows the entire downtrend that began on January 4, 2022 — the 1st wave that ended on October 13, and the 2nd wave, which may or may not have reached completion. (The blue line is the upper boundary of an expanding Diagonal Triangle that began in December 2018.)

At this point, I don’t have a principal analysis, only alternatives.

What are the alternatives? At issue is the meaning of the decline that began on June 27.

The June 27 peak may or may not be the end of the second corrective pattern within the upward correction, wave 2{-2}. Those are the first two alternatives upon which the analysis depends.

If the peak isn’t the end of the pattern, then the price will quickly reverse and the final way of the pattern, wave C{-3}, will continue its rise. Under the rules that govern 2nd-wave corrections, the price must remain below the start of the preceding 1st wave: 4953.25 on the futures and 4818.62 on the index.

If the peak is the end of the pattern, then there are two more alternatives.

A compound correction can contain two or three corrective patterns. If the second pattern is the final pattern, then the correction will have ended and a powerful downtrend, wave 3{-3}, will begin. If the correction moves on to a third corrective pattern, then the second pattern will be followed by a relatively small downtrending connector wave, X{-3}, and then the first wave of the third pattern, rising wave A{-3}.

Those are the five alternatives. As the charts show, the present decline so far is quite small on the futures chart and almost invisible on the larger index chart. It may be awhile before the ambiguities are resolved.

[S&P 500 E-mini futures at 3:30 p.m., 165-minute bars, with volume]

[S&P 500 index at 9:30 a.m., daily bars]

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

Known facts:

• 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 has completed its second corrective pattern.

Ambiguities

• Is the July 27 peak the end of wave C{-3} within the correction, wave 2{-2}?
• If wave C{-3} has ended, has wave 2{-2} also ended or will it produce a connector, wave X{-3}, and then move on to wave A{-3}, the first wave of a third corrective pattern?
• If wave 2{-2} has ended, a powerful downtrend, wave 3{-3}, is taking its tentative 1st steps.

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:
• Maybe 2{-2} Minute, 10/13/2022, 3502 (up) …
  • … or 3{-2} Minute, 7/27/2023, 4634.50 (down)

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.

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, August 2, 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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during much of the session, remaining above 4590 as the closing bell approached. Under the principal analysis, the second corrective pattern within the upward correction that began last October has ended, and a descending wave is under way to connect the second pattern with a third and final corrective pattern.

The connector is called an X wave, and its third and final subwave appears to be taking the form of a barrier triangle, with a flat lower price channel. I’ve put the triangle boundaries on the chart in red.

The principal analysis seems most likely to me, based on the chart. See below for the alternative described in this morning’ analysis.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell overnight, reaching into the 4590s.

What does it mean? The third wave down since the July 27 peak continues. The first wave had three subwaves, suggesting that the downward movement is a correction of some sort.

The late July peak may have marked the end of the second corrective pattern within a compound correction, wave 2{-2}, that began on September 13, 2023.

A compound correction can contain two or three corrective patterns. If wave 2{-2} is going for three patterns, then the present decline is a wave that will connect the now complete second pattern with a future third pattern.

Such connecting waves are call X waves in the classical nomenclature of Elliott wave analysis. An X-wave is built from three subwaves, meaning it is part of a corrective wave. The first wave down, which I’ve labeled as wave A{-4}, had three subwaves, and that suggests that the upward correction is continuing, the second corrective pattern ended on July 27, a connector wave is underway, and a third corrective pattern lies ahead.

What are the alternatives? It is possible that the decline since July 27 is a subwave of the ongoing final wave of the second corrective pattern. So far the decline has been quite small compared the waves of the second corrective pattern. The X-wave scenario raises the question of whether that principal analysis violates the tendency toward proportionality.

What I no longer think is an alternative at this point is the idea that the upward correction has ended entirely and a powerful downtrend, wave 3{-2}, is underway. The three-subwave structure of the first wave down from July 27 makes that impossible.

[S&P 500 E-mini futures at 3:30 p.m., 15-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underlie 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 has completed its second corrective pattern and has begun a connector wave, X{-3}, which will be followed by a third corrective pattern.
• Wave X{-3} will have three subwaves and is at wave C{-4}, the final subwave.
• 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:

• The final wave, C{-3}, of the second corrective pattern is not yet complete. Within it, wave E{-4} is in its fourth of five subwaves, wave D{-5}, a falling wave that will be followed by a final rise to completion.

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, 3502 (up)

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.

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, August 1, 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.