August Seasonality Played Out Perfectly


The fourth week of August played out as a trend week down continuation given the context of the 4320s top from mid August. It was a slow trend week down because the majority of the selling occurred during Monday Aug 22 and Friday. Many market participants got trapped during Tuesday-Thursday range days in order to get that massive ES -3.3% liquidation on Friday (-4% on NQ).

Overall, it was a relatively tough trading week for most, but fairly straightforward for train riders. As demonstrated in the Ricky’s ES service, train riders nailed multiple low of day/high of week setups. In addition, traders have banked over +278 ES points as we head into August month end closing. The results speak for themselves, see chart and table below.

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Key ideas for Aug 29:

  • Per our reports, we warned at the start of August, seasonality suggested a chopfest month and in reality this is exactly what the market gave us so far
  • At the start of the month, ES opened at 4130s, eventually rallied into 4320s high by Aug 16 and got rejected. Now, hovering around 4000s-4020s which is the current low of the month…as we head into end of August
  • If 4000-4015 support holds, primarily expecting a deadcat bounce into 4030/4050/4070/4080. Then, see how price reacts
  • If 4000 breaks and holds below, there is no significant support until 3950
  • Key levels between 4000 and 3950 are 3985/3965, but could be sliced through easily given the liquidation break from Friday Aug 26th
  • Key levels are static, context is dynamic, real-time execution is fluid
  • Reactionary day-to-day market environment so capture points/profits and cut losers quickly, know your timeframes and adjust. We utilize a level by level approach.
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ES AUG28_REVIEW
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Ricky Wen is an analyst at ElliottWaveTrader.net, where he writes a nightly market column and hosts the ES Trade Alerts premium subscription service.