SIGNS OF TOPPING STOCKS
(5/30): DOW futures are still shedding and got down to 38140 overnight. S & P cash got to 5235 overnight which was closer to the minimum target of 5225-5220. NQ held 18657 overnight on futures and is the only safe place that funds feel good about parking money—but for how much longer? We rarely like being long the last day of May but there is a positive cycle on Friday and if the PCE is not inflationary, oversold conditions could spark a rally.
Futures held their breakdown area overnight at 5244 and still could reach up to 5370 as we move into the FOMC meeting. Cash got closer to issuing a breakdown but not quite.
Patterns on cash look like a bounce to 5270 and then a new low to at least 5220 at least. That would go with our end of the month fall but cycles are mixed for surprises on Friday.
The broader market has confirmed a top but NQ and S & P cash have not. NQ cycles are friendly on Thursday but the larger energies have a lot of unraveling energy operating. NQ is still holding up but more cracks appearing S & P futures have to hold 5244 for 3 waves down or we will see 5225-5220 on futures before a bounce.
The backdrop in Europe is a bit unnerving as they are starting to call for mandatory conscription and pushing the war with Russia there. We have to watch the International Stock market index IWM which made a new low on the move to issue a sell signal and got to 201 overnight and could retest 200.70 the next few days before hitting an oversold situation.
All the bearish indices are oversold and we have to get secondary highs or new highs into early June to set up a nice short. DOW Transports are often a leading indicator for topping action and topped out a few weeks back and Dow Industrials issued a sell signal earlier this week.
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