3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures worked their way back in to the 4530s during the session and then returned to below 4510.

The price completed a small trending wave containing five subwaves. I’ve altered this morning’s count by pushing those subwaves down one degree, to {-6}, making the overnight low the end of wave 1{-5}. An upward correction, wave 2{-5}, is now underway.

Otherwise, this morning’s analysis stands. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded sideways overnight, whipsawing briefing after new inflation numbers were released and then quickly returning to the 4510s, where the price had spent most of its time since the last session closed.

At the opening bell the price rose into the 4120s.

What does it mean? The decline that began on September 11, the beginning of a 3rd wave downtrend, is now in its 3rd subwave. A 4th wave upward correction and a 5th wave decline lie ahead.

This is happening within a larger 3rd wave downtrend that began on September 1.

What are the alternatives? Corrections typically complete on corrective pattern and their done. Some corrections stretch out with two or three corrective patterns, each separated from its predecessor by a connecting wave. That could be the case here.

[S&P 500 E-mini futures at 3:30 p.m., 45-minute bars, with volume]

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

Principal analysis

• A downtrend wave 3{-2}, began on July 27 is underway.
• Within wave 3{-2}, wave 3{-3}, a powerful downtrend, began on September 1 and is in its third subwave, wave 3{-4}, which is downtrending.
• Internally, wave 3{-4} is now in wave 2{-5}.

Alternative analysis

• The end of wave C{-5} ends the first corrective pattern within wave 2{-4}. The subsequent decline is a connector, wave X{-5}, which will be followed by second corrective pattern in a compound correction.

Big picture

• Both the wave 2{-2} correction and wave 3{-2} downtrend are subwaves of wave 4{-1}, a downtrend that began on January 4, 2022.
• Wave 4{-1}, in turn, is a subwave of wave 5{0}, an expanding Diagonal Triangle that began on December 26, 2018.
• Wave 4{-1} may eventually reach the lower boundary of wave 5{0}, presently slightly below 1800 and declining further each day.
• Wave 4{-1} will be followed by rising wave 5{-1}, the final wave in the Triangle.

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)

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, September 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.