End of Month, Beginning of Month

After seven-out-of-Fibnnoacci-eight straight up days, eight of which had higher low candles, and three of which closed outside of the upper daily Bollinger Band, price today settled inside of the upper daily band, thereby at least resetting the number of consecutive closes. In the process a "spinning top" candle was formed.

ES Futures - Daily - Spinning Top Candle

It was not the greatest of moves downward, but it is occurring at or near a reasonable location. The internal count can still go two ways (we could have topped or still be in a larger triangle or diagonal). A significant new lower low day was not made. That's one reason why a spinning top requires a solid lower close candle after it to confirm it.

Today was the end of the month. As we have noted before, this is often a "window-dressing" day with considerable sloppiness. Tomorrow is the first of the month and might see the typical inflows from pension plans, 401k's, company bonuses, dividend reinvestment plans and the like.

The daily slow stochastic is still embedded. Therefore, patience and flexibility are still required until there is adequate evidence of something different. Tomorrow being Tuesday, it could be a reversal day. For example, even with the spinning top, there could be a higher high, followed by a bearish engulfing candle, but it certainly does not have to occur that way. Tomorrow is also the first of the month of September, and sometimes September is a weaker month.

Yesterday, we showed a four-hour chart of the NQ futures, and pointed out the "double 1.618 extensions". Today, the NQ futures settled right on that second 1.618 extension, putting a tail on it. We'll see if that remains significant tomorrow.

Have a great start to your evening.

P.S. This chart tries to help clarify this short term portion of the NDX count. It is rare that the reader will get to see the true form of an expanded triangle (the so-called megaphone pattern), so I thought it important that all see this outstanding example.

The pattern on the left is the true expanding triangle. Notice how every one of it's alternate legs expands in both time and price. ((D)) has more bars than ((B)), ((E)) has more bars than ((C)), and ((C)) has more bars than ((A)). Notice too, that true to an accurate triangle wave ((E)) does not end on the ((A))-to ((C)) trend line. Now, price appears to be in another channel up.

TraderJoe