Wednesday is the last day of the month. Typically you get a window dressing day where price action can be sloppy and seam like it has no actual structure to it. This is when traders and portfolio managers start to reduce positions of losers, which highlights their winners (similar to twitter no one ever has looses).
As of late trading ES futures has been a absolute blast for myself and some of my team members. This high volatility and large daily ranges is a day traders dream. On a intraday basis we use things such as Tick charts, fibs, wave theory, advance/decline, bullish/bearish volume readings, divergences, and pattern recognition. Swing traders and investors may not be having as much fun but they had their time now its ours :).
From a technical basis we are at a very interesting point in the SPX Cash Index. We are just above a three down 100% fib target of $2586.54. We have positive divergences all over the place and we are in a expanding megaphone (AKA a expanding ending diagonal which we will speak about now). On my 1 hour SPX chart you can clearly see we are in a wave C of an ABC down. Within the wave C I am considering a expanding ending diagonal. An expanding ending diagonal's rules are -Diagonal triangle subdivided into 5 waves - Wave 3 is always longer than wave 1, Wave 4 is always longer than wave 2, Wave 5 is typically the capitulation wave - Wave 5 typically comes close but does not touch the trend line that connects waves 1 and 3. The current chart structure checks off each one of these boxes.
In the overnight as I type this ES is at $2690 with a three up target of $2693. Tomorrow I am expecting a 50% backtest if we hold then thrust higher and convert ES weekly pivot at $2690.50 the low is in. My alternate is that we make the full ABC target at $2586.54 on a break through the 50% retracement support. Either way the Nassar Investing team has traded this recent market weakness very well and I am very proud of some of the analysis and trades they have brought to the table. We look to continue this through the next deeper bounce towards the mid $2700's while not engaging in twitter euphoria.
Happy trading everyone - Trade well, trade smart, and trade your own game plan.
To enlarge chart click here