3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures has reached a peak during today’s session of 4275. It reversed from that level, declined, and now has moved again back to the upside. A close view of the day’s trading suggests that internally, the upward movement is still in its third and most likely final leg. In Elliott wave terminology, the upward movement is wave 4{-9}, and within it, I count rising wave C{-10} as being underway. The C wave will most likely have five waves within it, and I count rising wave 3{-11} as now being underway, with declining wave 4{-11} and rising wave 5{-11} to follow.

10:15 a.m. New York time

Exited MRVL earnings play. I’ve exited my short bull put options spread on MRVL at 25% 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 to 4178.35 in overnight trading and then in the early morning hours reversed, rising nearly 95 points, to 4233.50.

What does it mean? By my principal analysis the low, 4178.35, marks the end of the middle leg of the decline that began on March 3 from 4418.75. The upward move is a low-level correction within the larger downtrend and will be followed by a push lower that I expect to reach below the February 24 low, 4101.75.

What’s the alternative? It possible to see the overnight low as being the end of the last leg of the decline from March 3, and the subsequent rise as the beginning of a larger upward correction that will carry the price up toward the March 3 high, 4418.75. I expect the price to remain below that level. I’ll discuss my reasoning for rejecting this scenario in the Elliott wave theory, below.

Also, as a second alternative, the downward leg could still be underway. If the subsequent rise continues with three legs — up, down, up — then this alternative will be disproven.

What does Elliott wave theory say? Under my principal analysis, the overnight low, 4138.75, was the end of wave 3{-9} within wave 1{-8}, both downtrending waves. The reversal from the overnight low is the beginning of wave 4{-9}, an upward correction, with three wave internally, within the larger downtrend.

Today’s analysis differs from Monday’s in that I’ve moved the end of wave 3{-9} to today’s low from Monday’s low point, 4181. The extent of the downward move had the feel of an energetic 3rd wave more than a 5th wave. Leaving the end of wave 3{-9} at 4181 produced an awkwardly short 3rd wave compared to the subsequent 5th.

Note that there is nothing in the rules that requires a 5th wave to be shorter than the preceding 3rd wave. The closest rule is that the 3rd wave can’t be shorter than both waves 1 and 5. And 5th waves have a lot of variety. They can be truncated, ending below the end of the preceding 3rd wave. Or they can extend, moving quite a bit further than seems reasonable.

As is often the case in Elliott wave analysis, it’s an aesthetic judgement — what analysis matches the look and feel of what I’ve seen before in my decades of chart analysis. If that look and feel changes, then I’ll readily alter my principal analysis to accommodate it.

So i rejected the alternative analysis, which labels the overnight low, 4138.75, as the end of wave 5{-9} within wave 1{-8}. the subsequent rise would be labeled wave A{-9} within wave 2{-8}, an upward correction.

A second alternative is that downtrendng wave 3{-9} is still underway. A rapid return to new lows after this morning’s rise will increase the likelihood of this scenario.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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, 3/3/2022, 4101.75 (down)
• 1{-8} Subminuscule, 3/3/2022, 4101.75 (down)
• 4{-9} Bitsy, 3/8/2022, 4178.35 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 8, 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.

S&P 500 ETF Trust (SPY)

Lot 2022-4

Update 4/12/2022: I exited my short bear call vertical options spread on SPY, two days before expiration, for an $8.50 debit per contract/share, a loss before fees of $392 per contract. Shares were trading at $443.33, up $20.5 from the entry level.

The Implied Volatility Rank at exit was 37.8%, down 64.9 points from the entry level.

I exited because the position because the options it was built from were days away from expiration. The position became unprofitable shortly after I entered it, and remained unprofitable as the share price moved contrary to my expectations.

Shares rose by 4.9% over 36 days for a +50% annual rate. The options position produced a 46.1% loss for a -468% annual rate.

---

I have entered a short bear call vertical spread on SPY, using options that trade for the last time 37 days hence, on April 14. The premium is a $4.58 credit per contract share and the stock at the time of entry was priced at $422.58.

The Implied Volatility Ratio stood at 102.7%.

Premium:	$4.58	Expire OTM
SPY-bull call spread	Strike	Odds	Delta
Calls
Long	440.00	72.0%	32
Break-even	434.58	66.5%	38
Short	430.00	61.0%	44

The premium is 91.6% of the width of the position’s short/long spread. The profit zone covers a 1.8% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 1.2:1, with maximum risk of $542 and maximum reward of $458 per contract.

How I chose the trade. SPY, along with the rest of the S&P 500 family of instruments, ended an upward correction on March 7 at 441.11 and resumed its downtrend. I expect the price to move below 410.64, where the correction began, and perhaps significantly below that level. I set the strike price for the long call close to the peak of the upward correction, anticipating that the price won’t move above that level.

By Tim Bovee, Portland, Oregon, March 7, 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.

Half an hour before the closing bell. See the 2:55 p.m. entry below. No change. Wave 5{-9} continues its decline. I’ve updated the chart again.

2:55 p.m. New York time

S&P 500 futures end upward correction, reverse downward. The S&P 500 futures have ended the wave 4{-9} upward correction and have reverse to the downside, moving below the correction’s starting point. I’ve updated the chart, below.

SPY options spread entry. I’ve entered a short bear call options spread on SPY, anticipating that it will track the S&P 500 to the downside as wave 5{-9} continues. I’ve posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a low of 4238 in overnight trading and then reversed, having risen more than 90 points at the opening bell.

What does it mean? The decline from March 3 high was a resumption of the downtrend that began on January 4. Internally, it is in an upward correction that began overnight within its first leg.

What’s the alternative? The ambiguity on the chart as to do with size of the movements being analyzed. Elliott waves are fractal in nature — a five-wave trend contains with it both smaller five-wave uptrends and three-wave corrections. The smaller degree labelings on a chart this early in a trend will be, at best, a guess.

What does Elliott wave theory say? Downtrending wave 5{-7}, a resumption of the downtrending wave 1{-6}, which began on January 4, is now underway. Internally, it is in wave 1{-8} to the downside, and one degree lower, within an upward correction, wave 4{-9}.

In Friday’s analysis I had labeled the smallest degrees on the chart as being of degree {-8}, but given the swiftness of their completion, I’ve pushed them down one degree smaller, to degree {-9}. This is what I meant above about the ambiguity of degrees early in a price trend — there’s simply not enough data to know for a certainty the size of the degree being labeled.

Wave 4{-9}, when complete, will be followed by wave 5{-9} to downside, the final wave within wave 1{-8}. It will carry the price below the 4238 terminus of wave 3{-8}, perhaps significantly below for such a small-degree wave.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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, 3/3/2022, 4101.75 (down)
• 1{-8} Subminuscule, 3/3/2022, 4101.75 (down)
• 4{-9} Bitsy, 3/7/2022, 4238 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 7, 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 futures fell from the overnight high, 4361.25, to low of 4281.25 during the day and then rose a bit. Wave 2{-8}, an upward correction, is underway and internally is in either its B (middle) wave to the downside or has started its C (final) wave to the upside. All of this is happening within downtrending wave 5{-7} within downtrending wave 1{-6}. 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 below the 50% retracement of the rise that began on February 24.

What does it mean? By my best reckoning, the March 3 peak marks the end of the upward correction that began on February 24. The final leg of the downtrend that began on January 4 is underway and will carry the price well below 4101.75, the end point of the middle leg of the downtrend.

What’s the alternative? There are two.

Alternative #1: The March 3 peak was the end of the first leg of the upward correction that began on February 24 and is still underway.

Alternative #2: The March 3 peak is the end of the final leg, still underway, of the ongoing upward correction.

What does Elliott wave theory say? Elliott wave analysis is famous for its ambiguities and is illustrating that fact again today. Everything hinges on the interpretation of the March 3 high.

Under my principal analysis, the March 3 high , 4418.75, marked the end of a Zigzag correction that began on February 24 from 4101.75. From that point wave 5{-7} began. It is the final wave within wave 1{-6}, the downtrend that began on January 4.

That principal analysis best fits the chart, in my opinion. However, a strong case can be made for the two alternative counts.

Alternative #1 sees the March 3 high as the end of wave A{-8}, the first leg of the wave 4{-7} upward correction that began on February 24. The subsequent decline under this scenario is wave B{-8}, which will be followed by a rising finale, wave C{-8}, which likely will end wave 4{-7}, unless it forms a compound structure, stringing several corrective patterns together.

Alternative #2, like the principal analysis, sees the March 3 high as being within wave C{-8}, but under this scenario wave C{-8} is not complete.

The principal analysis will be confirmed if the price falls below 4101.75, the end of wave 3{-7}. Alternative #1 will be proven if the price continues to decline but remains above the end of wave 3{-7}. Alternative #2 will be proven if the price moves above the March 3 high, 4418.75.

One note on the principal analysis. I’ve marked the March 3 low as the end of wave 1{-8}. The degree of a movement is at best a guess in the early stages, and that low could well be of a lower degree, {-9} or {-10}. The proper degree labelling will sort itself out as wave 5{-7} continues.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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, 3/3/2022, 4418.75 (down)
• 2{-8} Subminuscule, 3/3/2022, 4283.50 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 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.

Marvell Technology Inc. (MRVL)

Update 3/8/2022: I exited my bull put vertical options spread on MRVL, 37 days before expiration, for a $1.01 debit per contract/share, a profit before fees of $33 per contract. Shares were trading at $67.78, up $1.15 from the entry level.

The Implied Volatility Rank at exit was 66.7%, down 22.9 points from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 1.7% over 5 days for a +126% annual rate. The options position produced a 32.7% return for a +2,385% annual rate.

---

I have entered a short bull put vertical spread on MRVL, using options that trade for the last time 42 days hence, on April 14. The premium is a $1.34 credit per contract share and the stock at the time of entry was priced at $66.63.

The Implied Volatility Ratio stood at 89.6%.

Premium:	$1.34	Expire OTM
MRVL-bull put spread	Strike	Odds	Delta
Calls/Puts
Long	55.00	74.0%	18
Break-even	61.34	68.5%	23
Short	60.00	63.0%	28

The premium is 53.6% of the width of the position’s short/long spread. The profit zone covers a 7.9% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.7:1, with maximum risk of $366 and maximum reward of $134 per contract.

How I chose the trade. The trade was placed to coincide with MRVL’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $7.25 either way, based on options pricing, which gives a price range of $60.09 to $74.59.

By Tim Bovee, Portland, Oregon, March 3, 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 futures so far have traded below the morning high, 4418.75, throughout the session, remaining in the region between the 61.8% and 50% retracement levels. The analysis is ambiguous. Was the morning high the end of wave A{-8} within wave 4{-7}? Or is the present decline just a mini-correction within a still rising wave A{-8}? Flip a coin. there’s no way to choose between them. I’ve updated the chart, continuing to mark it to show wave A{-8} still in progress.

10:40 a.m. New York time

MRVL earnings play entry. I’ve entered a short bull put options spread on MRVL and have posted a trade analysis.

10:15 a.m. New York time

NEM earnings play exit. I exited my short bull put options spread on NEM for 28.1% of maximum 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 broke past the prior high, 4399, in the rise that began on February 24, reaching 4418.75 at the opening bell. The rise brought the price above the 61.8% Fibonacci retracement level.

What does it mean? The first leg of the upward correction that began on February 24 is still underway.

What’s the alternative? I have no viable alternative at this point. For more on the subject, see the Elliott wave theory section below.

What does Elliott wave theory say? The rise is wave A{-8} within wave 4{-7}. Yesterday’s afternoon analysis counted wave A{-8} as complete at the February 28 high, 4399. Today’s break above that level invalidates that analysis in favor wave wave A{-8} continuing. Under the rules of Elliott wave analysis, a 4th wave can’t move beyond the end of the preceding 1st wave. In this case, the end of wave 1{-7} was 4586 on February 2, and that price is the upper limit of wave 4{-7}.

In analyzing the chart I considered whether the February 28 high could be considered the end of wave A{-8}, the following decline wave B{-8}, and the subsequent rise still underway as wave C{-8}. However, under Elliott’s rules, a B wave must retrace at least 90% of the preceding A wave, and the rather stunted decline after February 28 falls short. So, I’m left without an alternative this morning. Past experience being a guide, I’m quite certain that ambiguities will develop.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• A{-8} Subminuscule, 2/24/2022, 4101.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 3, 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 market close. The S&P 500 futures rose to within two points of the February 28 high, 4399, which my analysis this morning had identified as the end of wave A{-8} and the beginning of downward wave B{-8}, the middle wave within the larger wave 4{-7} upward correction. If the price moves above 4399, then this morning’s analysis, which sees wave B{-8} as being underway, must be scrapped and replaced by the alternative, which sees wave A{-8} as being still underway. As of this time the B-wave-in-progress scenario stands. And under the alternative analysis, the only change is to the interpretation of the February 28 peak. The rest of the analysis applies to both scenarios. I’ve updated the chart.

10:30 a.m. New York time

OKE earnings play exit. I’ve exited my short bull put options spread on OKE for 24.8% of maximum potential profit and have updated the entry analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose from a 38.2% retracement back to a 50% retracement — both are Fibonacci levels — and then declined slightly before the opening bell.

What does it mean? The movement is consistent with my principal analysis from yesterday — the downward middle wave of an upward correction, which began on February 24, is now underway.

What’s the alternative? The upward correction ended at the February 28 high, and the subsequent decline is a resumption of the downtrend that began on January 4.

What does Elliott wave theory say? The decline from February 28 is wave B{-8} within an upward correction, wave 4{-7}, which began on February 24. All of that is happening within downtrending wave 1{-6}, which began on January 4. That 1st wave is contained within wave 1{-5} of wave A{-4}, which all began on that same day.

Wave B{-8} will be followed by upward wave C{-8}, the final wave in a three-wave corrective pattern. Under the rules of Elliott wave analysis the correction could end with the C wave. However, sometimes corrections have a compound structure, linking up to three corrective patterns together. If a compound correction forms, then upward wave C{-8} will be followed by downward wave X{-8}, which will connect the first corrective pattern with a second one. The parent wave is a 4th, and 4th waves have a greater tendency toward compound structures than do the other corrective waves, the 2nd.

When wave 4{-7} is complete, it will be followed by wave 5{-7}, which will fall below the end of the preceding 3rd wave, 4101.75 on February 24, perhaps significantly below that level. The end of wave 5{-7} will also end its parent, wave 1{-6}. The following wave 2{-6} will be an upward correction. Second waves tend to retrace a great deal of the preceding 1st wave, and so wave 2{-6} will present an opportunity to close out bullish positions before the magnitude of the subsequent wave 3{-6} decline puts the markets in panicky mood.

The alternative analysis sees the February 28 peak as the end of wave 4{-7} and the subsequent decline as the early stage of wave 5{-7}.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• B{-8} Subminuscule, 2/28/2022, 4399 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 2, 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 futures continued their decline during the day, reaching below the 38.2% retracement level. That’s a deep enough decline for me to switch the chart to showing the February 28 peak as the end of wave A{-8}, the first wave within the upward correction that began on February 24, wave 4{-7}. The downtrend that followed that peak is wave B{-8}, and it will be followed by wave C{-8} to the upside, which most likely will complete the wave 4{-7} correction. It’s possible that the correction will take a compound form, which links two or three corrective patterns together, and that would stretch the correction out for a longer time. After the correction is over, the downtrend will resume as wave 5{-7} to the downside, which will move below the February 24 low of 4101.75.

10:30 a.m. New York time

KR earnings play exit. I’ve exited my short bull put vertical spread on KR, an earnings play, for 25% 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 reached a high of 4399 in overnight trading, just below the 61.8% Fibonacci retracement level, and then retreated slightly.

What does it mean? Under my principal analysis, the first wave of the upward correction that began February 24 is still underway. The analysis will be proven if the price rises above 4399 and then, when the first wave is complete, declines in a second wave with three waves internally.

What’s the alternative? The high of February 28 marks the end of the entire correction and subsequent decline is a resumption of the downtrend that began on January 4. If the price declines in five waves, it adds credence to this scenario, and the lower the price goes, the more likely it becomes. A decline below the February 24 low, 4101.75, would be an unquestionable confirmation.

What does Elliott wave theory say? Under the principal analysis wave A{-8} within wave 4{-7} is still underway, although it may have ended at 4399, the overnight high. Under the alternative analysis, the overnight high marked the end of wave C{-8} within wave 4{-7}, and the downtrend has resumed with wave 5{-7}, which will carry the price below 4101.75, the endpoint of wave 3{-7}. and perhaps significantly below that level.

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.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-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)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• A{-8} Subminuscule, 2/24/2022, 4101.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way 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, March 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.

ONEOK Inc. (OKE)

Update 3/2/2022: I exited my short bull put vertical options spread on OKE, 43 days before expiration, for a $0.94 debit per contract/share, a profit before fees of $31 per contract. Shares were trading at $66.34, up $1.99 from the entry level.

The Implied Volatility Rank at exit was 27.0, down half a point from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 3.1% over two days for a +564% annual rate. The options position produced a 33.0% return for a +6,019% annual rate.

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I have entered a short bull put options spread on OKE, using options that trade for the last time 45 days hence, on April 14. The premium is a $1.25 credit per contract share and the stock at the time of entry was priced at $65.46.

The Implied Volatility Ratio stood at 27.5%.

Premium:	$1.25	Expire OTM
OKE-bull put spread	Strike	Odds	Delta
Puts
Long	57.50	78.0%	17
Break-even	63.75	67.5%	27
Short	62.50	57.0%	37

The premium is 50% of the width of the position’s short/long spread. The profit zone covers a 0.9% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 3:1, with maximum risk of $375 and maximum reward of $125 per contract.

How I chose the trade. The trade was placed to coincide with OKE’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $0.47 either way, based on options pricing, which gives a price range of $64.20 to $65.14.

By Tim Bovee, Portland, Oregon, February 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.

The Kroger Co. (KR)

Update 3/1/2022: I exited my bull put vertical options spread on KR, 44 days before expiration, for a $0.66 debit per contract/share, a profit before fees of $22 per contract. Shares were trading at $48.45, up $1.83 from the entry level.

The Implied Volatility Rank at exit was 98.6%, down 3.4 points from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 3.9% over one day for a +1,433% annual rate. The options position produced a 33.3% return for a +12,167% annual rate.

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I have entered a short bull put options spread on KR, using options that trade for the last time 45 days hence, on April 14. The premium is a $0.88 credit per contract share and the stock at the time of entry was priced at $46,62.

The Implied Volatility Ratio stood at 102%.

Premium:	$0.88	Expire OTM
KR-bull put spread	Strike	Odds	Delta
Puts
Long	40.00	85.0%	11
Break-even	44.88	73.5%	21.5
Short	44.00	62.0%	32

The premium is 44% of the width of the position’s short/long spread. The profit zone covers a 3.7% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 3.5:1, with maximum risk of $312 and maximum reward of $88 per contract.

How I chose the trade. The trade was placed to coincide with KR’s earnings announcement, before the opening bell on the day after entry. The short strike was set to coincide with the expected move of $2.97 either way, based on options pricing, which gives a price range of $43.64 to $49.58.

By Tim Bovee, Portland, Oregon, February 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.