3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures has traded sideways during the session, ranging from the 4450s to the 4470s and then narrowing as it repeatedly crossed the lower boundary of the expanding Diagonal Triangle that has been underway since August 9.

As of the time I’m posting, the price dropped to new lows within the triangle, to 4151.25 when I produced the chart, and immediately thereafter down to 4448.25.

As was the case this morning, the triangle’s present rising subwave, wave 4{-7}, remains well below the upper boundary, it’s eventual target. The decline that began on August 14 hasn’t broken far enough below the lower boundary to justify declaring the August 9 peak to be the end of a truncated wave 4{-7} and the beginning of the final subwave, wave 5{-7}.

So for now, I’m sticking with this morning’s analysis. Wave 4{-7} continues. However, it is a close call between that scenario and this morning’s Alternative #1, the wave 5{-7} scenario.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures peaked overnight at 4517.85 and then fell back to the 4470s.

What does it mean? The rise carried the price about halfway to the upper boundary of an expanding Diagonal Triangle that began on August 9, and the subsequent decline has come close to the lower boundary. Based on the typical form taken by an expanding Diagonal Triangle, I expect a reversal with the rise carrying the price above the overnight high. (The triangle boundaries are marked on the chart n red.)

The rise that began on August 11 is the 4th of five subwaves of the Triangle, wave 4{-7}. Sometimes a 4th wave will fail to reach the triangle boundary, and if that is the case, then the overnight rise was the final leg of wave 4{-7} and the subsequent decline is part of the triangle’s final subwave, wave 5{-7}.

At this point I think it’s more likely that the 4th wave is still underway.

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

What are the alternatives? There are three:

Alternative #1: Final wave scenario

• Rising wave 4{-7}, a subwave of wave 5{-6}, an expanding Diagonal Triangle, ended today, August 16, at 4517.75. Declining wave 5{-7}, the final subwave of the triangle, began from that point.

Alternative #2: Connector wave scenario

The long-running upward correction, wave 2{-2}, that has dominated the chart since last autumn may still be underway. Wave 2{-2} ran from 3502 to 4634.50. The low so far in the subsequent decline is 4459. That means that the decline has retraced only 15.5% of the upward correction, meaning that the scenario seeing the present decline as connecting two corrective patterns within an ongoing upward correction remains plausible.

• Wave 2{-2}, an upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow.

Alternative #3:

• I have listed the Triangle as being the from of wave 5{-6}. It’s still early days in the decline from July 27, and that wave’s degree could be higher — wave 5{-5} or wave 5{-4}.

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

Principal analysis:

• A downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.
• The final subwave within wave 5{-5} began overnight. Declining wave 5{-6} is now underway.
• Wave 5{-6} is its 2nd of five subwaves, an upward correction designated wave 2{-7}.

Alternative analysis:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 4634.50 (down) [The beginning price was in error and has been corrected.]

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 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 began the session low, from 4469, rising as the day progressed to 4503.25, two points above the overnight peak.

The analysis remains unchanged from this morning. Rising wave 4{-7} continues. It is the next-to-the-last wave within wave 5{-6}, an expanding Diagonal Triangle.

I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures bounced between the 4460s and around 4500 overnight, continuing the sideways pattern that closed last week’s chart.

What does it mean? Under the principal analysis, the price has been bouncing off of the lower boundary of an Expanding Diagonal Triangle that began on August 9. The triangle, whose boundaries are marked n red on the chart, is the final leg of a downtrend that began on August 4, which itself is part of a larger downtrend that began on July 27 and of a still larger downtrend, that began on January 4, 2022.

The sideways movement that has dominated the last few days is atypical of an expanding Diagonal Triangle. The price should bounce off the lower boundary and head back to the still rising upper boundary, and then bounce and fall again. The present hugging of the lower boundary breaks no rules of Elliott wave analysis, but it’s a bit unusual.

To accomodate the sideways pattern, I’ve moved the endpoint of wave 3{-7} to Friday’s low, 4459.

What are the alternatives? There are two:

Alternative #1:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow.

Alternative #2:

• I have listed the Triangle as being the from of wave 5{-6}. It’s still early days in the decline from July 27, and that wave’s degree could be higher — wave 5{-5} or wave 5{-4}.

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

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

Principal analysis:

• A downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.
• The final subwave within wave 5{-5} began overnight. Declining wave 5{-6} is now underway.
• Wave 5{-6} is its 2nd of five subwaves, an upward correction designated wave 2{-7}.

Alternative analysis:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 14, 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 meandered between the 4460s and the 4470s, repeatedly bouncing off the lower boundary of the expanding Diagonal Triangle that began on August 9. This morning’s analysis is unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures hit a high in the 4490s early in overnight trading and then declined, dropping sharply by 15 points when the Producer Price Index was released an hour before the opening bell.

What does it mean? The price decline bounced off of the lower boundary of an expanding Diagonal Triangle that began on August 9. It is the final wave within a low-degree downtrend that began on August 4, which is part of a much larger 3rd wave downtrend that began on July 27 from 4634.50 and which will eventually carry the price below 3500, perhaps significantly below that level.

The Triangle’s boundaries are marked on the chart in red.

Internally, the Triangle has completed three subwaves and is now in its rising 4th subwave, which will end around the upper boundary of the Triangle, presently in the 4550s and rising every minute, and will reverse downward as the 5th and final subwave.

The larger downtrend is wave 3{-2}, and the present expanding Diagonal Triangle is wave 5{-6}, four degrees smaller from than the downtrend. Internally, the Triangle is in rising wave 4{-7}.

A larger upward correction will follow, a 2nd wave that will take back a portion of the decline since July 27 and that will remain below 4634.50.

What are the alternatives? Unchanged from the day before.

Alternative #1:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow.

Alternative #2:

• I have listed the Triangle as being the from of wave 5{-6}. It’s still early days in the decline from July 27, and that wave’s degree could be higher — wave 5{-5} or wave 5{-4}.

[S&P 500 E-mini futures at 9:35 a.m., 30-minute bars, with volume]

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

Principal analysis:

• A downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.
• The final subwave within wave 5{-5} began overnight. Declining wave 5{-6} is now underway.
• Wave 5{-6} is its 2nd of five subwaves, an upward correction designated wave 2{-7}.

Alternative analysis #1:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow.

Alternative analysis #2:

• The Diagonal Triangle is wave 5{-5} within declining wave 1{-4} within wave 1{-3}, the first subwave within the downtrend, wave 3{-2}, that began on July 27.
• Or it could be one degree higher, wave 5{-4} within wave 1{-3} within wave 3{-2}.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 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.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 reached a high of 4544.75 during the session and then fell back into the 4470s. The final wave of the decline that began on August 9, wave 5{-6}, appears to be taking the form of an expanding Diagonal Triangle. I’ve shown the triangle boundaries in red.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures wandered between the 4490s and the 4510s until the latest inflation numbers were announced. At that point the price whipsawed, rocketing to 4525, plunging to 4494, and then returning to the 4510s, slightly above where it had been a minute before the announcement.

What does it mean? The whipsaw was part of a the 2nd of three subwaves within a small upward correction within a downtrend, one degree larger, that began on August 9. That downtrend is in turn the final subwave within a larger downtrend that began on August 4, the final wave of a series of nested downtrends within a major downtrend that began on July 27.

The July 27 downtrend, a 3rd wave, will carry the price below the starting point of the preceding 2nd wave correction, 3502, and most likely significantly below that level.

So whatever the daily ups and downs and occasional whipsaws, the trend of the market is down and main continue on that course for months.

What is the alternative?

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow

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

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

Principal analysis:

• A downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.
• The final subwave within wave 5{-5} began overnight. Declining wave 5{-6} is now underway.
• Wave 5{-6} is its 2nd of five subwaves, an upward correction designated wave 2{-7}.

Alternative analysis:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 10, 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 reached a low of 4478.25 during the session and the b rose back into the 4510s, remaining below the overnight high, 4536.25.

The final wave of the low-degree downtrend that began on on August 4 continues. Alternative analysis #1 from this morning is no longer possible. Otherwise, the analysis is unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose overnight from 4515.50 to 4536.25 and then pulled back.

What does it mean? The 4536.25 peak completes the 4th wave within a downtrend that began on August 4 and marks the start of the 5th and final wave.

The August 4 downtrend is a subwave within a nested series of subwaves of increasing size encompassed within the largest of the set, a significant 3rd-wave downtrend that began on July 27 from 4634.50.

What are the alternatives? There are two.

Alternative analysis #1:

It’s possible that the price will reverse, giving the 4th subwave a bit more distance to the upside before it reaches completion.

Note: The price movement during the session made this alternative impossible.

Alternative analysis #2:

At a larger scale, it’s possible that the 2nd-wave upward correction that preceded the 3rd-wave downtrend will add a third corrective pattern to the two that have already been completed. If this turns out to be the case, then the decline from July 27 is a wave connecting the second corrective pattern within the compound correction with a third and final pattern.

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

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

Principal analysis:

• A downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.
• The final subwave within wave 5{-5} began overnight. Declining wave 5{-6} is now underway.

Alternative analysis: #1:

• Rising wave 4{-6} is still underway.

Alternative analysis #2:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-2}, will follow

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 9, 2023

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell during the session to a low of 4482 and then rose, returning to the 4510s.

The upward reversal is a subwave, wave 4{-6}, within the final leg, wave {5-5}, within the decline that began on July 27, wave 1{-4}, a downtrend within two progressively larger downtrends, wave 1{-3} and wave 3{-2}.

Wave 4{-6} will be followed by a further push downward, as wave 5{-6}, which, when complete, will also be the end of wave 5{-5} and its parent, wave 1{-4}.

The subscripts in curly brackets, showing the placement of the waves within the fractal structure of the chart — their degrees — are solid at the higher levels, and less certain at the smaller. For example, wave 5{-5} may in fact be one degree higher, {-4}, or it could be one degree lower, {-6}, pushing the subwaves down a degree to {-7}. The degrees will become clearer wave 3{-2} downtrend develops.

This morning’s analysis is unchanged. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell overnight, from 4541 into the 4490s.

What does it mean? The rise from the August 7 low, 4493.75, was an upward correction within last leg of the larger downtrend that began on July 27. That last leg is itself a subwave of downtrends. each larger than the one within it, that all began on that date, which will appear on future charts as a major reversal point.

What are the alternatives? The downtrends, under the principal analysis, follow an upward correction that lasted nearly 10 months. The correction took a compound form and completed two corrective patterns.

Under the alternative analysis, it’s possible that the decline from July 27 is an X-wave, a connector linking the second corrective pattern with a third pattern that, when complete, will also be the end of the correction.

The further the price falls, the less likely this scenario becomes.

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

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

Principal analysis:

• An downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, which in turn is in its final subwave, wave 5{-5}.

Alternative analysis:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-3}, will follow

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 8, 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 during the session, so far reaching into the 4530s. The small upward correction that began overnight, a subwave of downtrending wave 5{-5}, continues and is now in its third and possibly final leg. Wave 5{-5} is a subwave of wave 1{-4} within a large downtrend, wave 3{-3}, than began on June 27.

This morning’s analysis is unchanged. I’ve updated the upper chart, which is a close-up view of the futures. The lower chart, a big picture view of the S&P 500 index, is unchanged from this morning.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose after trading resumed overnight, from 4500.50 into the 4520s.

What does it mean? The upward correction that began last October, wave 2{-2}, ended on July 27, and a downtrend that will last many months, wave 3{-2}, has begun.

The overnight rise is a small upward correction within the final wave of the earliest stage of the downtrend.

In Friday’s analysis I gave equal likelihood to the downtrend scenario and several alternatives. The clear five-wave pattern of the decline shifted the odds in favor of the downtrend, which is now the principal analysis.

The upward correction, now ended, began from 3502. The downtrend will carry the price below that level, and perhaps significantly below. The downtrend is a third wave, which is never the shortest of the three trending subwaves within a larger trend, and quite often, the third wave is the longest of them all.

The description most often associated with third waves is “powerful”.

All of this is happening within downtrending wave 4{-1}, which began on January 4, 2022. That wave is a subwave within an expanding Diagonal Triangle, wave 5{0}, that began on December 26, 2018.

What are the alternatives? It remains possible, although less likely, that the upward correction is still underway. The correction took a compound form and has completed two corrective patterns. Under this alternative scenario, the decline is a wave connecting the prior second corrective pattern to a third pattern that will complete the correction.

Reading the chart. The upper chart, of the S&P 500 futures, is a close-up focused on the decline that began on July 27. The lower chart, of the S&P 500 index, pulls back and shows the expanding Diagonal Triangle that began in 2018 and encompasses everything discussed in the analysis. The price-channel boundaries of the Triangle are shown in blue.

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., 30-minute bars, with volume]

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

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

Principal analysis:

• An downward correction, wave 3{-2}, began on July and is underway.
• Internally, the correction is in its first subwave, wave 1{-3}.
• Within wave 1{-3}, things become a bit more ambiguous, since the precise degree of the subwaves won’t become clear until the downtrend has progressed further.
• I’ve chosen, as a guess, to label the subwave of wave 1{-3} as being in its first wave, 1{-4}, wich in turn is in its final subwave, wave 5{-5}.

Alternative analysis:

• Wave 2{-2}, and upward compound correction that began on October 13, 2022 completed a second corrective pattern on July 27.
• The subsequent decline is wave X{-3}, a downward connector between the second corrective pattern and the future third corrective pattern.
• Once the third corrective pattern within wave 2{-2} has ended, a powerful downtrend, wave 3{-3}, will follow.

Big picture:

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

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 7, 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 during the session to 4560.75 and then reversed, falling into the 4490s. In the low-degree labels that I added this morning, the decline marked the end of a small upward correction, wave 4{-5}, and the beginning of the final wave of the series, wave 5{-5}.

Implications for two scenarios:

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

I’ve updated the chart.

9:35 a.m. New York time

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

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

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

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

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

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

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

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

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

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

Known facts:

• An upward correction, a Zigzag, wave 2{-2}, began on October 13, 2022 and is underway.
• The upward correction, wave 2{-2}, is taking a compound form, which can contain up to three corrective patterns.
• The correction has completed its second corrective pattern.

Ambiguities

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

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down) (tenatively)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 4, 2023

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

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

9:35 a.m. New York time

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

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

Here are the alternatives:

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

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

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

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

Known facts:

• An upward correction, a Zigzag, wave 2{-2}, began on October 13, 2022 and is underway.
• The upward correction, wave 2{-2}, is taking a compound form, which can contain up to three corrective patterns.
• The correction has completed its second corrective pattern.

Ambiguities

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

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• 3{-2} Minute, 7/27/2023, 3502 (down) (tenatively)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 3, 2023

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

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

9:35 a.m. New York time

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Known facts:

• An upward correction, a Zigzag, wave 2{-2}, began on October 13, 2022 and is underway.
• The upward correction, wave 2{-2}, is taking a compound form, which can contain up to three corrective patterns.
• The correction has completed its second corrective pattern.

Ambiguities

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

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• S&P 500 Index:
• 5{+3} Supercycle, 7/8/1932, 4.40 (up)
• 5{+2} Cycle, 12/9/1974, 60.96 (up)
• 5{+1} Primary, 3/6/2009, 666.79 (up)
• 5{0} Intermediate, 12/26/2018, 2346.58 (up)
• S&P 500 Futures and index:
• 4{-1} Minor, 1/4/2022, 4953.25 (down) (futures), 4818.62 (down) (index)
• S&P 500 Futures:
• Maybe 2{-2} Minute, 10/13/2022, 3502 (up) …
  • … or 3{-2} Minute, 7/27/2023, 4634.50 (down)

Reading the chart. Price movements — waves – – in Elliott wave analysis are labeled with numbers within trending waves and letters with corrective waves. The subscripts — numbers in curly brackets — designate the wave’s degree, which, in Elliott wave analysis, means the relative position of a wave within the larger and smaller structures that make up the chart. R.N. Elliott, who in the 1930s developed the form of analysis that bears his name, viewed the chart as a complex structure of smaller waves nested within larger waves, which in turn are nested within still larger waves. In mathematics it’s called a fractal structure, where at every scale the pattern is similar to the others.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 2, 2023

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.