3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 resumed its rise during the session, reaching above the weekend high of 3957.75, to upper 3900s. Uptrending wave C{-14} within an upward correction, wave 2{-13}, continues. No change in the analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range overnight, covering fewer than 50 points low to high.

What does it mean? The pause is a small-sized correction within the rising third leg of a larger upward correction that began June 30. That rise will resume when the small-sized correction is complete. When the third leg of the larger correction is complete, the most likely next step is for the downtrend that began on June 28 to resume.

What are the alternatives? There are two.

Alternative #1: The third leg of the upward correction ended at the overnight high, 3848.75, and the downtrend that began on June 28 has resumed.

Alternative #2: The decline that began on June 28, rather than being a downtrend, is instead part of a compound correction that began on June 14 and is still underway.

What does Elliott wave theory say? Under the principal analysis, the overnight pause is wave 4{-15}, a correction within rising wave C{-14}, which in turn is the third and possibly final wave within wave 2{-13}, a downtrend that began on June 28 from 3950. All are subwaves of downtrending wave 1{-12}, which began on June 28.

It’s possible that wave 2{-13} will form a compound structure, and if it does, wave C{-14} will be followed by a connector, wave X{-14}, and then a second corrective pattern. Compound structures are less common within 2nd waves, compared to 4th waves, and I consider such a structure to be unlikely at this point. Nonetheless, it’s not beyond the realm of possibility.

Under the first alternative, the upward correction, wave 2{-13}, ended overnight at 3848.75 and an energetic decline, wave 3{-13}, is taking its first tentative steps. I would expect wave 3{-13} to fall below 3741.25, the end of the preceding wave 1{-13}, and perhaps significantly lower.

Under the second alternative, the larger upward correction that began on June 14, wave {4-11}, is still underway and is forming a compound structure. The June 28 peak marked the end of wave C{-12}, also ending the first corrective structure within wave 4{-11}. The decline that followed is wave X{-12}, a connector wave, and the first wave of a second corrective structure, wave A{-12}, is now underway.

The three scenarios are subwaves of wave 3{-10}, which began on June 2 from 4189, within wave 5{-9}, which on May 30 from 4202.25.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 6, 2022

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 fell for part of the session, to 3744 on the futures, and then reversed to the upside, remaining above the June 30 low, 3741.25, which marked the beginning of an upward correction of low degree.

Because the price remained above the June 30 low, I’ve revised this morning’s principal analysis to show that the upward correction has not ended. Rather, the correction, wave 2{-13}, has completed two waves and internally is now in its 3rd and possibly final wave, C{-14} to the upside.

The alternative is still viable: A larger correction, wave 4{-11}, that began on June 14 is still underway and is taking a compound form, as described below in this morning’s post.

Rather than revising this morning’s chart, I’m adding a new chart so that readers can compare the changes.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose in overnight trading to 3957.75 and then reversed to the downside.

What does it mean? The rise was an upward correction within a larger downtrend, which began on June 28 from 3950, and the subsequent decline is a resumption of a smaller downtrend within the larger.

What is the alternative? The upward correction that began on June 14 is still underway and is forming a compound structure. The decline from the June 28 peak is a movement connecting the completed corrective pattern with a second corrective pattern, which has not yet begun.

What does Elliott wave theory say? Under the principal analysis, downtrending wave 5{-11} began on June 28 from 3950 and internally is within its 1st wave — wave 1{-12} — which completed its first segment, wave 1{-13}, on June 30 at 3741.25 and its second segment, wave 2{-13}, overnight at 3957.75. The decline from the overnight peak is wave 3{-13}, which is likely to carry the price below the June 30 reversal point, 3741.25.

Under the alternative analysis, wave 4{-11}, an upward correction that began on June 14, completed a three-wave corrective pattern with wave C{-12}, ending on June 28 at 3950. The decline that followed is the first sign that wave 4{-11} is forming a compound correction. The decline is a connector wave, X{-12}, and it will be followed by a second corrective pattern.

Whichever analysis proves to match the events to come, it is all happening within downtrending wave 3{-10}, which began on June 2 from 4189, within wave 5{-9}, which began on May 30 from 4202.25.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 5, 2022

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.

11 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range on Monday, as U.S. markets were closed to celebrate American independence from the British Empire. The price decline from the lower 3800s into the upper 3700s, covering fewer than 40 points altogether.

What does it mean? The June 30 low, 3741.25, marked the end of the initial leg of the downtrend that began two days earlier. The largely sideways movement that followed is an upward correction within the downtrend.

What are the alternatives? It’s possible that the decline that began on June 28 is part of a compound correction, linking a second corrective pattern to the first and extending the upward correction that began on June 14.

What does Elliott wave theory say? Under the principal analysis, wave 5{-11} began on June 28 from 3950 and internally completed wave 1{-13} on June 30 at 3741.25. Wave 1{-13} is the initial wave within wave 1{-12}, the first wave within the wave 5{-11} downtrend. Wave 2{-13}, an small upward correction, is now underway, and will be followed by a relatively more powerful decline, wave 3{-13}.

Under the alternative analysis, wave 4{-11}, which began on June 14 from 3708.50 is still underway and is forming a compound correction. The first corrective pattern ended with wave C{-12} on June 28 at 3950, the decline that followed is wave X{-12}, connecting the first corrective pattern with a second pattern to come.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 4, 2022

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.

Market holiday on Monday. U.S. markets will be closed on Monday for a holiday celebrating America’s winning its independence from the British Empire. Trading will resume on Tuesday. The S&P 500 E-mini futures usually resume trading the day before the post-holiday trading session. I’ll keep an eye out for that on Monday and, if events warrant, will post an analysis.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has continued trading within a narrow range, reaching into the low 3800s and remaining above yesterday’s low on the futures, 3741.25. Downtrending wave 5{-11} continues, having paused for a small internal upward correction. No change in the analysis. I’ve updated the chart.

9:45 a.m. New York time

MU earnings play exit. I’ve exited my short bear call vertical spread on MU for 26.7% of maximum potential profit and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range overnight, remaining above yesterday’s low, 3741.25.

What does it mean? The downtrend that began on June 28 continues.

What is the alternative? The upward correction that began on June 14 could still be underway, and if so, then the downward movement from June 28 would be a connecting wave within a compound structure, that strings together two or three corrective patterns.

What does Elliott wave theory say? Under the principal analysis, downtrending wave 5{-11} is underway. Its completion will also mark the end of its parent, wave 3{-10}, which began on June 6 from 4189. An upward correction, wave 4{-10}, will follow the 3rd wave, with 4189, the starting point of wave 3{-10} being the upper limit of how far the 4th wave correction can go. It could, of course, travel far less than that distance.

Under the alternative analysis, wave 4{-11}, an upward correction that began on June 14, is forming a compound structure. The first corrective pattern ended on June 28 with wave C{-12}, and the ensuing decline, wave X{-12}, will connect that first pattern with a second corrective pattern. And a third pattern could be added on in a like manner. When wave 4{-11} is complete, then wave 5{-11} will begin, as described above.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 1, 2022

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.

Micron Technology Inc. (MU)

Lot 2022-2

Update 7/1/2022: I exited my short bull put vertical spread on MU, 49 days before expiration, for a $0.87 debit per contract/share, a profit before fees of $31 per contract. Shares were trading at $53.23, down $1.34 from the entry level.

The Implied Volatility Rank at exit was 13.7%, up one point from the entry level.

I exited on the day after entry because the position reached 26.7% of maximum potential profit, slightly better than my normal exit point for earnings plays, 25% of max.

Shares fell by 2.5% over one day for a -896% annual rate. The options position produced a 36.5% return for a +13,312% annual rate.

---

I have entered a short bear call vertical spread on MU, using options that trade for the last time 50 days hence, on month day. The premium is a $1.16 credit per contract share and the stock at the time of entry was priced at $54.57.

The Implied Volatility Ratio stood at 12.7%.

Premium:	$1.16	Expire OTM
MU-bear call spread	Strike	Odds	Delta
Calls
Long	65.00	85.0%	20
Break-even	61.16	78.5%	27.5
Short	60.00	72.0%	35

The premium is 46.4% of the width of the position’s short/long spread. The profit zone covers a 12.1% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 3.3:1, with maximum risk of $384 and maximum reward of $116 per contract.

How I chose the trade. The trade was placed to coincide with MU’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $3.62 either way, based on options pricing, which gives a price range of $52.19 to $59.43.

By Tim Bovee, Portland, Oregon, June 30, 2022

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 continued to decline during the morning, reaching 3741.25 on the futures and then reversing back in to the low 3800s before resuming the decline. The movement appears too small to be an immediate child wave of the downtrend that began on June 28. I’m staying with this morning’s labeling of that downtrend as wave 5{-11}. I consider it to still be in its first subwave, 1{-12}. No change in the analysis. I’ve updated the chart.

10:40 a.m. New York time

MU earnings play entry. I’ve entered a short bear call vertical spread on MU using options that trade for the last time on August 19 and have posted an analysis of the trade.

10 a.m. New York time

WBA earnings play exit. I’ve exited my short bear call spread options position on WBA for 53.8% of maximum potential profit and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined further overnight, into the upper 3700s.

What does it mean? The downtrend that began on June 28 continues and likely will carry the price significantly lower. It is a continuation of the larger downtrend that began on June 2

What is the alternative? The upward correction that began on June 14 from 3708.50 is still underway and is forming a compound structure. The present decline is a wave that will connect the just completed corrective pattern with a second corrective pattern.

What does Elliott wave theory say? Under the principal analysis, downtrending wave 5{-11}, which began on June 28, is underway. Although it could be cut short — “truncated” is the term of art — it will most likely fall below the end of the preceding wave 3{-11}, at 3708.50 on June 16, and typically it will move lower by a significant amount.

Under the alternative analysis, the wave 4{-11} upward correction that began on June 14 has completed one corrective pattern and is now in a declining connector wave, X{-12}, which will be followed by a second corrective pattern, and perhaps by a third. Once the compound correction is over, wave 5{-11} will begin and behave as described in the principal analysis.

The end of wave 5{-11} will also be the end of its parent, wave 3{-10}, which began on June 2 from 4189. The ensuing upward correction, wave, 4{-10}. A 4th wave correction typically ends within the 4th subwave of the preceding 3rd wave. In this case, wave 4{-10} would end in the range of wave 4{-11} within wave 3{-10} — between 3639 and 3950.

Wave 5{-10} will follow, carrying the price still lower. The end of wave 5{-10} will also be the end of 5th waves up to wave 5{-7}, three degrees larger. Wave 5{-7}, in turn, will be the final wave within wave 1{-6}, which began on January 4 from 4808.25. The ensuing wave 2{-6} upward correction may well retrace a significant amount of the wave 1{-6}, although that’s a tendency, not a guarantee.

The June 28 high, 3950, is as high as the S&P 500 is likely to go over the nearer term (weeks to a few months). Over the next six months or so, the 4700s are likely to be the upper limit of the market’s rise.

The end of wave 2{-6}, however high it goes, will also be the start of wave 3{-6}, a downtrending wave with all of the power that 3rd waves tend to display. Wave 1{-6} has covered about a thousand points so far.

Wave 3{-6} can be expected to cover several multiples of its final distance, although, again, with a caveat: The rule is that a 3rd wave can’t be shorter than both the preceding 1st wave and the ensuing 5th wave. If either the 1st or the 5th wave is uncharacteristically short, then the 3rd wave could turn out to be quite short without breaking the rule.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 30, 2022

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.

Walgreens Boots Alliance Inc. (WBA)

Lot 2022-2

Update 6/30/2022: I exited my short bear call vertical spread on WBA, 50 days before expiration, for a $0.48 debit per contract/share, a profit before fees of $56 per contract. Shares were trading at $39.43, down $1.34 from the entry level.

The Implied Volatility Rank at exit was 83.0%, down 0.7 points from the entry level.

I exited on the day after entry because the position reached 53.8% of maximum potential profit, well above my normal exit point for earnings plays, 25% of max.

Shares declined by 3.3% over one day for a -1,200% annual rate. The options position produced a 116.7% return for a +42,538% annual rate.

---

I have entered a short bear call vertical spread on WBA, using options that trade for the last time 51 days hence, on August 19. The premium is a $1.04 credit per contract share and the stock at the time of entry was priced at $40.77.

The Implied Volatility Ratio stood at 82.3%.

Premium:	$1.04	Expire OTM
WBA-bear call spread	Strike	Odds	Delta
Calls
Long	47.50	94.0%	9
Break-even	43.54	81.5%	23.5
Short	42.50	69.0%	38

The premium is 41.6% of the width of the position’s short/long spread. The profit zone covers a 6.8% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 3.8:1, with maximum risk of $396 and maximum reward of $104 per contract.

How I chose the trade. The trade was placed to coincide with WBA’s earnings announcement, before the closing bell on the day after entry. The short strikes were set to coincide with the expected move of $1.77 either way, based on options pricing, which gives a price range of $38.89 to $42.33.

By Tim Bovee, Portland, Oregon, June 29, 2022

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 has traded in a narrow range during the session, keeping to the low- and mid-3800s on the futures. No change in the analysis. I’ve updated the chart.

10:50 a.m. New York time

WBA earnings play entry. I’ve entered a short bear call vertical spread on WBA, using options that trade for the last time on August 19, and have posted a trade analysis.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell in overnight trading, pausing in the low 3800s.

What does it mean? The sharp decline is a resumption of the downtrend that began on June 2 and is the downtrend’s final leg. The downtrend resumed following the end of preceding upward correction, on June 28 at 3950

What are the alternatives? There are two.

Alternative #1: The decline is an internal movement within the third leg of the upward correction, which is still underway.

Alternative #2: The upward correction is taking a compound form, and the decline will connect the first corrective pattern with a second corrective pattern to come.

What does Elliott wave theory say? Under the principal analysis, the upward correction, wave 4{-11}, ended on June 28, and the ensuing wave 5{-11} resumes the downtrend, wave 3{-10}, that began on June 2.

Under the first alternative analysis, wave 4{-11} is still underway, and the decline is a subwave of the corrective pattern’s third and final wave, C{-12}.

Under the second alternative analysis, wave 4{-11} is forming a compound correction. Wave C{-12} ended on June 28, wrapping up the first corrective pattern. The ensuing decline is a connector, wave X{-12}, which will be followed by a second corrective pattern within wave 4{-11}.

In any case, the end of wave 4{-11} is followed by wave 5{-11}, a resumption of the downtrend that began on June 2.

A 5th wave has no rules limiting how far down it can go, although it must fit in reasonably with other waves a similar degree. A move below the start of wave 4{-11}, from 3708.50 on June 14, will strengthen the case that the 5th wave is underway. If the decline ends up with five waves internally, that will confirm that the decline is wave 5{-11} .

If the decline ends up with three waves internally, then the second alternative is confirmed. The decline is wave X{-12}, a connector wave in a compound correction.

If the decline reverses from the present level and moves above the June 28 high of 3950, then wave C{-12} within wave 4{-11} is still underway.

Whichever scenario plays out, wave 5{-11} when complete, will also mark the end of wave 3{-10} and the beginning of a significant upward correction, wave 4{-10}. A 4th wave tends to retrace between 66% and 81% of the preceding 3rd wave, which at a minimum will cover 480.5 points, and will perhaps move much further. So I expect wave 4{-10} to give the S&P 500 a significant boost to the upside from the end of wave 3{-10} before the following wave 5{-10} carries the price further down into the cellar.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 29, 2022

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 peaked today, nine minutes after the opening bell, at 3950 on the futures, and began a sharp decline that so far has carried the price down to the low 3800s.

Under my revised principal analysis, the last leg of the upward correction that began on June 14 ended at today’s high, also bringing the upward correction to an end. The subsequent decline is a resumption of the downtrend that began on June 2. Rising wave C{-12} and the upward correction, wave 4{-11}, have ended, and downtrending wave 5{-11} has begun.

Under my first alternative analysis, today’s high is the end of a subwave of rising wave C{-12}, the last leg of the upward correction, wave 4{-11}, which is still underway.

Under my second alternative analysis, today’s high ended the first corrective pattern within a compound correction. Wave C{-12} has ended, and the subsequent decline is a connector wave, X{-12}, which is still underway, all happening within wave 4{-11}.

Bottom line: There is a lot of ambiguity at this point. I see close to equal likelihoods for the principal analysis and either of the alternatives. The velocity of today’s decline persuaded me to choose as the principal analysis the scenario that says that the upward correction has ended and the downtrend has resumed. That could change in the days to come.

I’ve added a new chart so as to allow comparison with this morning’s now outdated analysis.

10:10 a.m. New York time

NKE earnings play exit. I exited my bear call spread on NKE for 37% of maximum potential profit and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell in overnight trading and then reversed, so far remaining below yesterday’s high, 3948.

What does it mean? The upward correction that began on June 14 continues and most likely is in its final leg. The correction will be followed by a decline that is likely to carry the price into the mid-3600s or lower.

What are the alternatives? If the correction forms a compound structure, connecting two or three corrective patterns, then the last leg of the present corrective pattern will be followed by a connector wave, and then a second corrective pattern. Altogether, compound corrections can link together up to three corrective patterns. After the compound correction is over, a decline will carry the price into the mid-3600s or lower.

The Chart. I’ve superimposed a Fibonacci retracement ladder in red, showing the Fibonacci levels of the upward correction’s retracement of the prior downtrend, which began on June 8 from 4164. Yesterday’s high was slightly above the 50% retracement level, and the overnight decline brought the price close to the 38.2% retracement level. The Fibonacci levels above yesterday’s high is the 61.8% level, at 3990, and 78.6%, at 4066.52. Either would be a reasonable ending point for the upward correction now underway.

(3:30 p.m. New York time: Note that the chart below has been outdated by the day’s developments. See the revised analysis and a new chart, above.)

What does Elliott wave theory say? The upward correction is wave 4{-11}, and the corrective pattern is in its 3rd and perhaps final wave, C{-12}.

If wave 4{-11} forms a simple correction, then wave C{-12} will be the end of the upward correction and the start of wave 5{-11}, a resumption of the downtrend that began on June 2, wave 3{-10}. If wave 4{-11} forms a compound correction, then wave C{-12} will be followed by a connector wave, X{-12}, and then a second corrective pattern, most likely consisting of three subwaves.

How high can wave 4{-11} rise? Under the rules of Elliott wave analysis, a 4th wave can’t move beyond the end of the preceding 1st wave. In this case, wave 1{-11} ended at 4076 on June 7. If the price within wave 4{-11} rises above that level, then the count no longer matches the chart and will require a reanalysis. On the chart, the end of wave 1{-11} is 29 points plus change above the 78.6% Fibonacci retracement level.

Once the correction is complete, whether compound or simple, wave 5{-11} will begin, resuming the wave 3{-10} downtrend that began on June 2. There is no limit on how far a 5th wave can travel, beyond the need, under the rule of proportionality, for the distance traveled to be consistent with other waves of the same degree. Wave 5{-11}, when complete, will mark the end of the parent, wave 3{-10}, and will be followed by an upward correction, wave 4{-10}, which is one degree larger than the present correction.

This is all happening within wave 5{-9}, which began on May 30 from 4202.25, and its ancestors, wave 5{-8}, which began on April 21 from 4509, and wave 5{-7}, which began on March 29 from 4631. The parent of them all is wave 1{-6}, which began on January 4 from 4808.25, the start of a major downtrend.

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)
• 4{-1} Minor, 1/4/2022 4818.62 (down)
• 1{-2} Minute, 1/4/2022 4818.62 (down)
• S&P 500 Futures and index:
• 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 1{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/29/2022, 4631 (down)
• 5{-8} Subminuscule, 4/21/2022, 4509, (down)

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 28, 2022

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.

Nike Inc. (NKE)

Update 6/28/2022: I exited my short bear call vertical spread on NKE, 52 days before expiration, for an $0.85 debit per contract/share, a profit before fees of $50 per contract. Shares were trading at $107.22, down $3.77 from the entry level.

The Implied Volatility Rank at exit was 98.8%, up 11.9 points from the entry level.

I exited on the day after entry because the position reached 37% of maximum potential profit, above my normal exit point for earnings plays, 25% of max.

Shares fell by 3.4% over one day for a -1,240% annual rate. The options position produced a 58.8% return for a +21,471% annual rate.

---

I have entered a short bear call vertical spread on NKE, using options that trade for the last time 53 days hence, on August 19. The premium is a $1.35 credit per contract share and the stock at the time of entry was priced at $110.99.

The Implied Volatility Ratio stood at 86.9%.

Premium:	$1.35	Expire OTM
NKE-bear call spread	Strike	Odds	Delta
Calls/Puts
Long	125.00	81.0%	25
Break-even	121.35	76.5%	30
Short	120.00	72.0%	35

The premium is 54% of the width of the position’s short/long spread. The profit zone covers a 9.3% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 2.7:1, with maximum risk of $365 and maximum reward of $135 per contract.

How I chose the trade. The trade was placed to coincide with x’s earnings announcement, after the closing bell on the day of entry. The short strike was set to coincide with the expected move of $8.50 either way, based on options pricing, which gives a price range of $103.77 to $118.22.

By Tim Bovee, Portland, Oregon, June 27, 2022

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.