3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during the session into the 4110s, slightly below the 68.1% Fibonacci retracement level. That’s one of the most common reversal points, in my experience. So if the price is going to reverse and keep the correction going, this is the place to do it. A confirmation would been a rise above the correction high so far, 4227.25. Conversely, if the decline keeps going, then the further it drops, the more likely it is that 4227.25 was indeed the end of the upward correction and an energetic downtrend has begun.

For now, I’m keeping the chart labeling as it was this morning, based on the scenario that the correction continues. I’ve updated the chart to show the additional decline.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to fall overnight, reaching into the 4130s.

What does it mean? The downtrend can mean a couple of things, and it’s not clear which. The question: Has the correction that began on October 13, 2022 ended, or is it still underway as it moves through its final stages?

The evidence that the correction has ended: The decline has possibly formed five waves, which increases the odds that the upward correction ended on May 19 at 4227.75.

The evidence that the correction continues: Subtracting from those odds is the fact that the decline has retraced only 50% of the preceding upward movement. Moreover, the small upward movement that follows the 3rd wave within the downward movement is quite small, so it may be a subwave one degree lower than the decline and that 3rd wave might well still be underway.

For the present I’m retaining the scenario that sees the decline as a movement within the last subwave of the upward correction that began last October.

A decline below the 61.8% Fibonacci retracement level would buttress the case for the correction having ended on May 19. A fall below the end of the previous declining wave, 4062.25, would persuade me that the correction had ended and a powerful downtrend had begun.

What are the alternatives? In addition to the two possibilities discussed above, the correction may form a compound structure. The end of the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining connecting wave and then a second corrective pattern. Compound corrections can be formed from as many as three corrective patterns.

Reading the chart. I’ve placed a Fibonacci retracement ladder on the chart, in red, to better judge how much of the previous rise has been retraced by the present decline.

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.

[S&P 500 E-mini futures at 3:30 p.m., 140-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses. There are two principal analyses because we are at a moment of profound ambiguity on the chart.

Principal analysis, correction complete:

• The upward correction, wave 2{-7}, that began on October 13, 2022 ended on May 19 and the downtrend, wave 3{-7}, has begun and is in its early stages.

Principal analysis, correction continues:

• The wave 2{-7} correction’s first subwave, wave A{-8}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 2{-7} is in its final subwave wave, C{-8}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves C{-8} and of the correction, wave 2{-7}.
• Downtrending wave 3{-7} will follow the end of the correction and will carry the price a significant distance below present levels..

Alternative analysis, compound correction:

• The end of wave C{-8} may won’t be the end of the wave 2{-7} correction.
• Wave 2{-7} will form a compound structure and wave C{-8} ends the first corrective pattern.
• Wave C{-8} will be followed by a declining connector, wave X{-8}, and then by a second corrective pattern.

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)
• 3{-6} Submicro, 8/16/2022, 4327.50 (down)
• 2{-7} 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, May 24, 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 continued falling throughout the session, reaching into the 4150s. The further it falls, our trader intuition tell us, the more likely it is that the upward correction, wave 2{-7}, ended at 4227.25 and that a powerful downtrend, wave 3{-7}, has begun.

I’m a big fan of intuition — the personality tests say it’s my main way of thinking — but can Elliott wave analysis give us something more substantial to guide our interpretation of the chart?

The key, I think, is the lowest degree wave that we’re tracking, marked as declining wave D{-10} on the chart. Wave D{-10} is the next-to-the-last subwave, the 4th of five, within rising wave E{-9}, the final wave within the final subwave of the correction, rising wave C{-8}.

Fourth waves usually have three subwaves, and indeed, we can clearly see on the chart that wave D{-10} is in the 3rd subwave of its decline, declining wave C{-11}. This gives us two possible outcomes after C{-11} ends:

• If the wave reverses to the upside and rises above 4222.75, the prior peak within wave D{-10}, then the correction is underway as is its subwave, rising wave E{-10}.
• If the wave reverses upward but remains below 4222.75, then the correction ended at 4227.25 and the downtrend, wave 3{-7}, is underway.

At this point I see no change in this morning’s 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 4180s.

What does it mean? The pullback is a low-level reversal within the final wave of an upward correction that began on October 13, 2022. The reversal will be followed by a final push that will likely exceed 4227.50, the correction’s peak so far. That rise, when complete, will mark the end of the correction and the start of a downtrend that will carry the price down a significant distance, into the 3200s and perhaps as much as a thousand points lower

What are the alternatives? There are two.

Alternative #1, game over: The upward correction ended at the May 19 peak and the downtrend has begun.

Alternative #2, compound correction. The correction will forming a compound structure. The end of the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining connecting wave and then a second corrective pattern. Compound corrections can be formed from as many as three corrective patterns.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

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.

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

Principal analysis:

• An upward correction, wave 2{-7}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-8}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 2{-7} is in its final subwave wave, C{-8}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves C{-8} and of the correction, wave 2{-7}.
• Downtrending wave 3{-7} will follow the end of the correction and will carry the price a significant distance below present levels..

Alternative #1, game over

• The upward correction, wave 2{-7}, ended on May 19 and the downtrend, wave 3{-7}, has begun and is in its early stages.

Alternative analysis #2, compound correction:

• The end of wave C{-8} may won’t be the end of the wave 2{-7} correction.
• Wave 2{-7} will form a compound structure and wave C{-8} ends the first corrective pattern.
• Wave C{-8} will be followed by a declining connector, wave X{-8}, and then by a second corrective pattern.

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)
• 3{-6} Submicro, 8/16/2022, 4327.50 (down)
• 2{-7} 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, May 23, 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 opening bell. The S&P 500 futures traded between the 4190s and the 4220s during the session, as the upward correction that began on October 13, 2022 works its way through its final phases. I’ve posted a close-up chart, showing the final subwave within the correction. In Elliott wave terminology, it’s wave C{-8} within wave 2{-7}.

Internally, wave C{-8} is in its 5th and final wave, E{-9}, which in turn is probably in its middle wave, C{-10}. I say probably because there’s a bit of ambiguity in the count. The middle wave scenario seems to be the best map for this part of the chart.

Here’s the near-term chart, just updated.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

9:35 a.m. New York time

A note on this Trader’s Notebook. There’s a lot going on in today’s Trader’s Notebook, in addition to the usual sections.

A section titled “A revised analysis” describes changes I made to the Elliott wave analysis over the weekend that impacts the numbering of the upward correction we’ve been following for more than half a year.

The section “How far is down” attempts to determine the magnitude of the decline that will follow the upward correction, in light of the reworking of the analysis.

Enjoy.

What’s happening now? The S&P 500 E-mini futures stayed in a narrow range after trading resumed overnight.

What does it mean? There are two possibilities, both concerning the status of the upward correction that began on October 13, 2022.

• 1) Under one interpretation of the chart, the correction ended on May 19 at 4227.25 and the subsequent decline is the early stage of what will become a significant downtrend.
• 2) Under another interpretation, the decline from the May 19 peak is a low-level pause before the correction resumes its rise.

I’ve marked the chart as though the upward correction were still underway, which is the second analysis.

Reading the chart. Readers will notice a change in the numbering of the upward correction. I’ll describe the changes in the next section, but first, a review of how the numbering system works.

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.

I’ve pulled back the chart to show a full year, which shows where the changes were made. Key changes on the chart are the placement of the waves 1{-6} and 2{-6} endpoints, which set up the numbering for wave 3{-6}, the parent wave of the present upward correction, wave 2{-7},

A revised analysis. In working over the weekend I found a 1st wave that was disproportionately long and a 3rd wave that was disproportionately short. To fix those problems, I’ve redone the count, as follows:

• The decline from August 16 to October 13, 2022 is now wave 1{-7}
• The subsequent rise from October 13, 2022 to the present is now wave 2{-7}.
• Wave 2{-7} is the upward correction that in earlier posts had been numbered wave 4{-6}.
• Wave 2{-7} is very near it’s end — no change from earlier analyses.
• Wave 2{-7} will be followed by a powerful downtrend, wave 3{-7}, a downtrend that in earlier analyses had been numbered wave 5{-6}.

Long story short: The correction and other waves of the same degree have been moved down one level.

What are the alternatives? The principal analyses assume that the correction will take a simple structure, containing one three-wave corrective pattern. If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining connecting wave and then a second corrective pattern. Compound corrections can be formed from as many as three corrective patterns.

[S&P 500 E-mini futures at 9:35 a.m., daily bars, with volume]

How far is down? The whole analysis at this point is focused on when big downtrend begins. Under the revised count described above, it is a 3rd wave, the middle wave of the larger downtrend that encompasses the upward correction (wave 2{-7} and the decline that preceded it (wave 1{-7}). The downtrend that follows wave 2{-7} is of the same degree and is numbered wave 3{-7}.

In his book, Elliott Wave Principle, Robert Prechter, the leading theoretician of Elliott wave analysis for the last half century, called 3rd waves “wonders to behold”. They’re energetic and sometimes extend much further than usual. Some 3rd waves have more energy than others. As with everything in the markets, it’s a matter of waiting to see how the chart plays out and then putting it in a context that suggests what is likely to come next.

There are some tendencies. One of them is that the length of a 3rd wave is often 1.5 to 3 times the length of the 1st wave that preceded it. So let’s use that guidance to gain a very tentative idea of how far wave 3{-7} might travel.

First, for now, I’ll assume that Friday’s high, 4227.25, is the start of the downtrend. The correction could go higher, and if it does, then the calculation will change.

Wave 1{-7} had a length of 749 on the S&P 500 futures.

• Multiply that length by 1.5 and we get a 3rd-wave end point of 3203, a decline of 32%.
• Multiply the length by 3 and we get a 3rd-wave end point of 2079, a decline of 103%.

On the S&P 500 index, wave 1{-7} had a length of 833.70.

• Multiply the length by 1.5 and the 3rd-wave end point is 3074.73, down 37.%
• Multiply the length by 3, and the 3rd-wave end point is 1824.18, down 131%.

It is important to keep in mind that the starting point is assumed and not proven. The multipliers are tendencies, not rules. A lot of other things can happen. The calculation produces an end-point if all of the assumptions and tendencies come true, which they rarely do. Myself, I never bet on a top or a bottom or a target price. I track the wave as it develops and make trading decisions based on the reality of the chart at the time.

The value of the calculation is that it gives a sense of the magnitude of what lies ahead. And even that can be wrong. The markets are filled with surprises.

This approach is based on something I say in every edition of Private Trader: “Elliott wave analysis provides context, not prophecy.”

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

Principal analysis:

• An upward correction, wave 2{-7}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-8}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 2{-7} is in its final subwave wave, C{-8}, which began on March 13, 2023.
• Wave C{-u} is taking the form of a Zigzag and as expected, has already exceeded the peak of the first subwave of the correction, wave A{-8}, which ended on December 13, 2022 at 4180.
• Wave C{-7} is in its final subwave, wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves C{-8} and of the correction, wave 2{-7}.

Alternative analysis, compound correction:

• The end of wave C{-8} may won’t be the end of the wave 2{-7} correction.
• Wave 2{-7} will form a compound structure and wave C{-8} ends the first corrective pattern.
• Wave C{-8} will be followed by a declining connector, wave X{-8}, and then by a second corrective pattern.

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)
• 3{-6} Submicro, 8/16/2022, 3502 (down)
• 2{-7} Minuscule, 10/13/2022, 3502 (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, May 22, 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 declined during the session, to the 4190s, slightly below the overnight peak. The decline came close to reaching a Fibonacci retracement level, 38.2%.

The form of the decline is that of an impulse wave, the familiar five-wave pattern found within the 1st, 3rd and 5th subwaves of trends, and the 1st. subwave of all three-wave corrections.

By one interpretation, the final subwave of the low-degree wave I’m tracking, rising wave E{-9} on the chart, ended at today’s peak, and the decline is a low-degree component of the 1st wave within a downtrend, which will be numbered wave 5{-6} on the chart.

By a second interpretation, the peak today was the end of the 3rd subwave within wave E{-9} and the 4th subwave is underway.

I’m sticking with the second interpretation on the chart for now, awaiting some clarity in Monday’s trading. At this point I’m expecting a bit more upside from wave E{-9} before it reaches its end.

I’ve updated the upper chart, showing the S&P 500 futures.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight, reaching 4227.25, the highest point in the upward correction that began on October 13, 2022.

What does it mean? The new correction high increases the likelihood that the correction is nearing it’s end, and that any higher high could in fact be the completion of the correction. We’re fishing for a top.

The final low-degree rising wave that I’m tracking will have five internal waves. The final wave is in its 4th subwave, and with the new high may have begun its 5th and final subwave.

When the rising subwave is complete, it will also be the end of the correction. A downtrend will follow. It will carry the price below 3502, the start of the correction, and most likely significantly below that level.

This is all happening within a much larger downtrend that began on January 4, 2022, the 4th subwave of an expanding Diagonal Triangle that began on December 26, 2018.

See the “We Are Here” section, below, for a list of the current waves that enclose the shorter-term chart.

What are the alternatives? The principal analysis assumes that the correction will take a simple struture, containing one three-wave corrective pattern. If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining connecting wave and then a second corrective pattern. Compound corrections can be formed from as many as three corrective patterns.

Chart talk. I’ve pulled the chart back from yesterday in order to show the upward correction of the futures in its entirety, and I’ve added a second chart, showing the S&P 500 index back to the beginning the Diagonal Triangle that encloses all that has happened since late 2018.

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.

[S&P 500 E-mini futures at 3:30 p.m., 480-minute bars, with volume]

[S&P 500 index at 9:35 a.m., 3-day bars, with volume]

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

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is taking the form of a Zigzag and as expected, has already exceeded the peak of the first subwave of the correction, wave A{-7}, which ended on December 13, 2022 at 4180.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its final subwave, rising wave E{-9}. It is in its next-to-the-last subwave, wave 4{-10}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves E{-8}, C{-7} and of the correction, wave 4{-6}
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 19, 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 rose further, to 4199.25. No change from this morning’s analysis. Rising wave E{-9}, a small subwave within the upward correction, wave 4{-6}, continues. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures climbed overnight to 4183.75 and then pulled back into the 4160s.

What does it mean? The upward correction is nearing its end, with subwaves across three degrees in their final stages. At this point any high could be the end of the correction. Or not.

I’ve changed the ending point of the declining subwave that began on May 10 from May 16 to May 12. The internal wave count works better. On the chart that subwave is labeled D{-9}.

What are the alternatives? If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

[S&P 500 E-mini futures at 9:35 a.m., 120-minute bars, with volume]

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

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is taking the form of a Zigzag and as expected, has already exceeded the peak of the first subwave of the correction, wave A{-7}, which ended on December 13, 2022 at 4180.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its final subwave, rising wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves E{-8}, C{-7} and of the correction, wave 4{-6}
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 18, 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 rose rapidly during the session, rising more than 50 points, from 4122 to 4179 and then pulling back slightly.

The rise broke beyond the upper boundary of the triangle, and with that new information, I’ve changed the endpoint of wave D{-9} from May 10 to the May 16 low, 4120. The breakout carried the price above the preceding C-wave peak, 4161, but remains below the preceding A-wave peak, 4206.25, (I’ve corrected the price labeling both of those peaks on the chart.)

Wave E{-9} is the final wave of wave E{-8}, which in turn is the final wave within wave C{-7}, which is the last wave of the upward correction that has been underway since October 13, 2022.

Typically wave E{-9} will move

Bottom line: The end is near.

I’ve updated the chart and the Elliott wave section, both below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to progress through its final phase within the narrow bounds of a triangle structure.

What does it mean? The triangle, which began on May 10, is part of the final segment of an upward correction three levels larger that began on October 13, 2022. The end of the triangle will also be the end of the larger correction and will be followed by a downtrend that will carry the price below the correction’s starting point, 3502, and likely well below that price.

On the chart, I’ve marked the triangle structure now underway with red lines. See the Reading the Chart section below for an explanation of the wave labeling.

What are the alternatives? Unchanged from yesterday. If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses, updated with the afternoon analysis.

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is taking the form of a Zigzag and as expected, has already exceeded the peak of the first subwave of the correction, wave A{-7}, which ended on December 13, 2022 at 4180.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its final subwave, rising wave E{-9}.
• The end of wave E{-9} will cascade up the wave degrees, marking the end of waves E{-8}, C{-7} and of the correction, wave 4{-6}
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 17, 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 continued to fluctuate narrowly as it works its way through a triangle, the wave that, when complete, will also be the end of the much larger upward correction that began last October. No change from this morning’s analysis. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued zigzagging overnight, reaching a low of 4135.25 and then rising to a peak of 4151.50 before pulling back.

What does it mean? In last Friday’s analysis I mentioned the possibility that a triangle was developing. It’s clear now that such is the case. The triangle form can be characteristic of the final wave of a larger movement. If the triangle analysis proves to be correct, then the upward correction that began on October 13, 2022 is in its last leg down three levels of subwaves. The triangle is nearing the 4th of five subwaves.

What are the alternatives? If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

Reading the chart. On the chart, I’ve marked the triangle structure now underway with red lines.

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.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

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

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its final subwave, wave D{-9}, which is taking the form of a triangle.
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 16, 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 continued to fluctuate narrowly during the session, between an early low in the 4120s and the session high in the 4150s. This morning’s analysis stands unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose into the 4150s after trading resumed overnight, and then fell, reaching into the 4130s so far.

What does it mean? The upward correction that began on October 13 continues to work through its final movements. The correction is in its last leg. Internally, that final upward movement is in the final subwaves two degrees down, and at the lowest level I track, is in its next-to-the-last subwave, a downward movement that began on May 10.

The end of that smallest wave will also be the end the correction, which will be followed by a downtrend that will fall below the correction’s starting point, 3502, and most likely quite a distance below that level.

What are the alternatives? There are two, unchanged from week. The first is likely to remain with us as a possibility until after the final wave of the correction is complete; the second until the smallest wave in my analysis, the one that began on May 10, reaches its end.

Alternative #1

If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

Alternative #2

For the second alternative, I’ll need to se the jargon of Elliott wave analysis that is used on the chart. See the “Reading the Chart” section below for an explainer.

In the nearer-term, we’re wading through the ambiguities of which low point marks the end of the downtrending low-degree wave, D{-9}, and the final uptrending wave, E{-9}, that will bring the correction to an end. Identifying turning points means navigating the ambiguity inherent in Elliott wave analysis. So, rule of thumb: Each low since the May 10 peak could be the end of the D{-9}. Or not. Each high could mean the final wave, E{-9}, has begun. Or not.

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.

[S&P 500 E-mini futures at 3:30 p.m., 120-minute bars, with volume]

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

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its next-to-the-last subwave, falling wave D{-9}.
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis #1, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

Alternative analysis #2, turning points

• At some point, wave D{-9} will end and wave E{-9}, the final wave that will end the upward correction, will begin.
• It won’t be obvious when that happens.
• A move below the prior low point of wave D{-9} will confirm that the wave has been underway, and it may or may not end at that new low.
• A move above the wave C{-9} peak will confirm that wave D{-9} has ended and wave E{-9} has begun.

Bigger structures:

• This is all happening within downtrending wave 1{-5}, which began on January 4, 2022 from 4808.25.
• Wave 1{-5} is a subwave of a nested series of larger subwaves, from wave 1{-4} to wave 1{-2}. which also began on January 4, 2022.
• Wave 1{-2} is a subwave of wave 4{-1}, the next-to-the-last wave within a large expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018.
• When wave 4{-1} is complete, wave 5{-1} will begin and will carry the wave above the January 4 high.25, and back to the upper boundary of the triangle, which gets higher continually and is in the 6140s.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 15, 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 dropped rapidly during the session, reaching a low so far of 4111.75. The fall broke the triangle pattern discussed this morning. I count the decline as the 3rd internal wave within the lowest degree that I’m tracking, wave D{-9}. It’s a subwave within rising wave E{-8} within rising wave C{-7} within the upward correction, wave 4{-6}. Wave E{-9} will follow and when complete, will be the end of the correction. A downtrend, wave 5{-6}, will follow. I’ve updated the chart below.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose back into the 4160s overnight, remaining below yesterday’s session high, and then began to decline again. The pattern since May 10 has begun to resemble a contracting triangle, with higher lows and lower highs. Both high turning points are positioned lower than the one before, and the low turning point between them being higher than the one before. I think of such narrowing price swings as an equally batched battle between Bulls and Bears that often suggests that a change in direction lies ahead.

What does it mean? There’s no guarantee that the pattern will in fact form a triangle, and so for now I’m staying with yesterday’s analysis. The upward correction is nearing its end, is in its final wave both one degree and two degrees down, and is in its next-to-the-last wave three degrees down.

What are the alternatives? There are two, unchanged from yesterday.

If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

It’s not really an alternative, but in the nearer-term, we’re wading through the ambiguities of which low point marks the end of the downtrending low-degree wave, D{-9}, and the final uptrending wave, E{-9}, that will bring the correction to an end. Identifying turning points means navigating the ambiguity inherent in Elliott wave analysis. So, rule of thumb: Each low since the May 10 peak could be the end of the D{-9}. Or not. Each high could mean the final wave, E{-9}, has begun. Or not.

Reading the chart. I mentioned “degrees” above, 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 mathematicfs it’s called a fractal structure, where at every scale the pattern is similar to the others.

My labeling system assigns numbers to the subwaves of trending waves, and letters to the subwaves of corrections. Each number or letter is followed by a subscript, in curly brackets, showing the wave’s degreeThe smaller the number, the lower the degree. On this chart we’re dealing with relatively small waves, so the degree numbers are negative.

[S&P 500 E-mini futures at 3:30 p.m., 2-hour bars, with volume]

What does Elliott wave theory say? Here are the waves that underly the analyses, unchanged from yesterday.

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its next-to-the-last subwave, falling wave D{-9}.
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

Alternative analysis, turning points

• At some point, wave D{-9} will end and wave E{-9}, the final wave that will end the upward correction, will begin.
• It won’t be obvious when that happens.
• A move below the prior low point of wave D{-9} will confirm that the wave has been underway, and it may or may not end at that new low.
• A move above the wave C{-9} peak will confirm that wave D{-9} has ended and wave E{-9} has begun.

Bigger structures:

• This is all happening within downtrending wave 1{-5}, which began on January 4, 2022 from 4808.25.
• Wave 1{-5} is a subwave of a nested series of larger subwaves, from wave 1{-4} to wave 1{-2}. which also began on January 4, 2022.
• Wave 1{-2} is a subwave of wave 4{-1}, the next-to-the-last wave within a large expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018.
• When wave 4{-1} is complete, wave 5{-1} will begin and will carry the wave above the January 4 high.25, and back to the upper boundary of the triangle, which gets higher continually and is in the 6140s.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 12, 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 fluctuated narrowly during the day, ranging from the 4120s to the 4140s. There’s no change in the analysis from this morning. The upward correction continues to work through it’s final patterns before reaching an end. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell to the 4120s in overnight trading, remaining within Wednesday’s range, from the 4170s to the 4110s.

What does it mean? The upward correction that began on October 13, 2022 is nearing its end, and is working through its final subwaves two degrees smaller. Drop down one degree — the lowest level I’m tracking — and the price is in its declining next-to-the-last subwave.

When that smallest wave, D{-9} on the chart, reaches its end, that finality will cascade up the fractal structure, bringing the correction itself — wave 4{-6} on the chart — to a close.

A downtrend will follow, carrying the price below the correction’s starting point — 3502 — and most likely noticeably lower.

What are the alternatives? If the correction forms a compound structure, then the present corrective pattern won’t complete the correction. Instead, it will be followed by a declining wave and then a second corrective pattern. Compound corrections can be formed from as many as three patterns.

It’s not really an alternative, but in the nearer-term, we’re wading through the ambiguities of which low point marks the end of the downtrending low-degree wave, D{-9}, and the final uptrending wave, E{-9}, that will bring the correction to an end. Identifying turning points means navigating the ambiguity inherent in Elliott wave analysis. So, rule of thumb: Each low since the May 10 peak could be the end of the D{-9}. Or not. Each high could mean the final wave, E{-9}, has begun. Or not.

[S&P 500 E-mini futures at 3:30 p.m., 2-hour bars, with volume]

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

Principal analysis:

• An upward correction, wave 4{-6}, began on October 13, 2022 and is underway.
• The correction’s first subwave, wave A{-7}, had five subwaves, meaning the correction is taking the form of a Zigzag
• Wave 4{-6} is in its final subwave wave, C{-7}, which began on March 13, 2023.
• Wave C{-7} is in its final subwave, wave E{-8}.
• Wave E{-8} is in its next-to-the-last subwave, falling wave D{-9}.
• Wave 4{-6} will be followed by downtrending wave 5{-6}, which, like all 5th waves, might match one of a number of different patterns, all based on the downtrend’s relation with the end of the preceding 3rd wave, at 3502.
• Almost always a 5th wave will move past the preceding 3rd wave’s end point.
• Some 5th waves are truncated, and on this chart that means wave 5{-6} would end before reaching 3502.
• Some 5th waves are extended, that would mean wave 5{-6} would have nine waves internally rather than the usual five, and would cover a greater than expected distance over a greater than expected period of time.

Alternative analysis, compound correction:

• The end of wave C{-7} may won’t be the end of the wave 4{-6} correction.
• Wave 4{-6} will form a compound structure and wave C{-7} ends the first corrective pattern.
• Wave C{-7} will be followed by a declining connector, wave X{-7}, and then by a second corrective pattern.

Alternative analysis, turning points

• At some point, wave D{-9} will end and wave E{-9}, the final wave that will end the upward correction, will begin.
• It won’t be obvious when that happens.
• A move below the prior low point of wave D{-9} will confirm that the wave has been underway, and it may or may not end at that new low.
• A move above the wave C{-9} peak will confirm that wave D{-9} has ended and wave E{-9} has begun.

Bigger structures:

• This is all happening within downtrending wave 1{-5}, which began on January 4, 2022 from 4808.25.
• Wave 1{-5} is a subwave of a nested series of larger subwaves, from wave 1{-4} to wave 1{-2}. which also began on January 4, 2022.
• Wave 1{-2} is a subwave of wave 4{-1}, the next-to-the-last wave within a large expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018.
• When wave 4{-1} is complete, wave 5{-1} will begin and will carry the wave above the January 4 high.25, and back to the upper boundary of the triangle, which gets higher continually and is in the 6140s.

Reading the chart. Elliott wave analysis views the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. My labeling system assigns numbers to the subwaves of trending waves, and letters to the subwaves of corrections. Each number or letter is followed by a subscript, in curly brackets, showing the waves position within the complex structure, called its “degree” in Elliott wave parlance. The smaller the number, the lower the degree. On this chart we’re dealing with relatively small waves, so the degree numbers are negative.

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)
• 4{-6} Submicro, 10/13/2022, 3502 (up)
• C{-7} Minuscule, 3/13/2023, 3830.25 (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, May 11, 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.