Bulls Need a Stick Save - It Could Happen, But be Very Cautious

Yesterday, on the chart in the post-script of our article, we had posted minute wave ((iv)) at the 7,756 level in the NASDAQ 100 Index after carefully watching the overnight futures prices and determining that a downward pointing diagonal was not forming. Higher highs for the NDX cash index did occur. The futures also made "five waves up" including a verified ending diagonal at the end of the day. The chart is below.

NASDAQ 100 (NQ) Futures - 15 Minutes - Five Waves Up

Further, we noted that often the end of the month is "window dressing time". On this index, the window dressing began in earnest after the cash close.

There are now a clear five non-overlapping waves upward, with much of the overnight session occupying a very long wave iv. This was followed by an overlapping five-wave diagonal fifth wave higher. And this ending diagonal is a verified diagonal. Prices exceeded the start of the diagonal lower in less time than the diagonal took to form. Further, the high of wave i has now been overlapped downward. Therefore, this can not be part of the fourth wave, it must be a larger degree second wave, or a full-on down move.

There are 111 candles on the chart - which is not too bad of a fit for The Eight Fold Path Method's recommended 120 - 160 candles.

The reason the bulls need a "stick save" is that the diagonal is verified. It may just end  this wave sequence. This wave might only be the first of a larger wave for minute ((v)). But, if that is the case, then prices should not trade below that 7,756 low. As far as I know, where cash did make a higher high, the futures did not.

The large drop in the NQ came when Alphabet (GOOG) reported a revenue miss, and  the stock dropped 5% in the after-hours. So, even if a stick-save does occur (sometimes these things reverse by morning) the whippy action means a good deal of caution in wave counting is needed.

Have an excellent start to your evening.

TraderJoe