Today was the expected window dressing day (which started actually in last night's overnight session with Alphabet's revenue miss and stock decline).
Tomorrow is the first trading day of the new month as well as the FED meeting, decision, and news conference following. So, we could see some inflows, some reaction to the Fed, and all around some volatility. With the ES price still above the 18-day SMA, and daily slow stochastic still embedded it still has a positive bias although it is bumping up against its upper daily Bollinger Band, which lends a note of caution.
The Russell 2000 futures had two clear Elliott Wave patterns on the intraday chart, which is shown below.
|Russell 2000 Futures - Intraday - Two Patterns|
The first pattern on the left is a clear, very whippy, Leading Contracting Diagonal a wave. This is a proven diagonal and the measurements were pretty exact. The b wave retrace was absolutely minuscule which is what prompts Glenn Neely to say that the b wave of a zigzag can be - at times - as little as a 1% retrace. This is awful stuff if one is looking for proportional waves. The c wave down was the bulk of the window dressing. Then, after a five-wave a wave up beginning after 10 am, a fairly rare barrier triangle begins with three waves down to (a).
It is hard to catch some of these patterns on larger time scales, so this one is presented for learning purposes. Notice how the a wave, up, forms part of the barrier. It is rare to catch this. Also while the (b) wave does not make a new high, the (d) wave just pips over the high but does not close above it. This is a requirement on the time-scale of the triangle.
Finally, notice with what precision the (e) turns around and bangs the lower triangle trend line yet avoids closing below the (c) wave. Also note how flat the MACD indicator is during this time period. This is very characteristic of triangles.
On the Russell, there is a potential for these three-wave sequences to become part of an ending diagonal. If so, this one would be wave (iii), higher, if it does bust through and make the new high.
Let's see what tomorrow brings.
Have a good start to the evening.