Category: Financial Markets Update

FOR TUESDAY: (10/11) We still like the stock market this week and would buy dips overnight and we may get a rebalancing of Monday’s dull trade on Tuesday with a lower dollar and higher foreign currencies for a day, and that may push gold up for another sale. Silver cycles look buoyant and we wouldn’t sell for a few days.  Crude close to major resistance target of 5250 should come in shortly for top-pickers.

Lately Mondays have been a throw-a-way day that’s either countertrend on the week or too sluggish. Not seeing anything dramatic this weekend but we want to buy stocks for next week and do one last sale in metals if they bounce to the right spots. Oil will be a major sale near 5220-5250 when it comes in.

FOR FRIDAY: (10/7) Another employment report day. Cycles are particularly volatile and that means the head fake and then the end of the week profit-taking. For now it seems a higher dollar and then a pullback and higher stocks and then a pullback and lower bonds and then a recovery and lower metals and then a recovery. The counter-trend bounces may be significant for traders and scalpers and we will have to wait for next set-ups.

FOR THURSDAY: (10/6) Trade waiting on Friday’s employment report. Cycles look weak for Thursday and Friday and we expect stocks to sell off. Other markets may be more congestive waiting for the news. Still, we wonder if the trade will ignore a weak number and rally the market and indications are that we will get a weak number if ADP and ISM service meant anything today.

FOR WEDNESDAY: (10/5) Lots of tensions building as in Russian/US relations over Syria and Deutsche Bank insolvency and now the EU wants to start letting go of QE. Guccifer released more damning Clinton Foundation data but you will have to dig to find it in a media that is owned and operated by the oligarchy. S & P already at lower end of the trading range increases the chances for much lower prices into Friday/Sunday. Wednesday seems like the best day for a stock market bounce. Unclear what kind of fun surprises are coming but fear and tensions cycles do peak over the weekend so expect a climax around Syria and other tensions.

FOR TUESDAY: (10/4) China is gone all week for Golden Week and while Germany will come back and trade will wander back from the Jewish New Year, we still may have a sloppy week. We’re very open to a crisis meltdown toward the end of the week but we never want to use the word crash. The oligarchs are good at keeping their fingers in the dike and a recent article noted that they have enough cash to keep the game and QE going another 4 years! By next Sunday we will favor a seasonal buy on stocks and at the moment they’re not giving us much of a pullback to play.

FOR MONDAY: (10/3) Seemingly confirming the rumor, Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market as it would appear that unconfirmed sources have ‘fixed’ the world’s most systemically dangerous bank (despite the fact that short-dated counterparty risk is soaring). Giving DB some breathing room is the fact that Monday is a banking holiday in Germany and that will leave traders in limbo.

The first of the month is often an up day for the stock market and cycles are positive so the market likely to accelerate and throw the bears under the bus. Given how rumors and problems so often erupt with these matters and given that cycles are messy next week for financials, we doubt we will get a clear-cut resolution. Moreover, we then have to deal with choppy trading ahead of the Oct. 7 employment. No rest for the wicked. Hard to make recommendations here on Friday and the first day of the new month tends to be a big-range volatile day anyway so have to see what unfolds.

FOR FRIDAY: (9/30) Deutsche Bank continues on the tilt-a-whirl, suggesting a Lehman moment, and of course they’re spouting rhetoric of how all is OK in the same kind of denial that Lehman spouted days before they collapsed. Some investors are starting a minor run but ultimately the government will come in and save DB. Starting to think climax by Oct. 9 so it continues to seem safer to be short overnight for a world and market on edge. Still, we won’t discount the power of the oligarchs to keep their world going and richer so those expecting the end of the world with DB or a Trump win will be disappointed. One of my favorite movies by Luis Bunel, The Discreet Charm of the Bourgeoisie, is a reminder of that: whatever the ups and downs and craziness of this group, they continue to grow and prosper and rule.

FOR THURSDAY: (9/29) Still lots of data coming out and now we’re moving toward position squaring by fund managers at the end of the quarter. They push often stocks lower into the end of the month so they can buy them back for the seasonal October buy. T-notes look lower one more day. Everything is starting to get a bit more overdone.

DEC. E-MINI S & P 500

ANALYSIS FOR WEDNESDAY: (9/28) Resistance overnight at 2157-2159.50. Much above 2160 and we may have to rethink the pattern and what’s happening. The most bullish scenario and would probably project 2122 on futures. Cash still wants to fill the 2164 gap from Monday. Deutsche Bank isn’t any better and that will still hang over the market.

OVERALL: Key support at 2122-2125. Three larger waves down could easily go to 2087 or 2072 this week and we had started to give up on that scenario after the Yellen save last week. Open to more if news gets messy but usually you can’t get too bearish in October. We’re waiting for the Merkel save after her practical and realistic announcement this week. Given the EU bail-in capacity and the impact on the economy, she is not thinking like a businessman.

WEEKLY CHART All the patterns and seasonals point to higher prices into October, with 2218 being the next larger target. Will need some major unexpected news item to rattle the markets and so far it may be Deutsche Bank but maybe more coming.

SHORT-TERM: (9/26) Market may consolidate before Oct. 7 employment report and then take off, with Oct. 17-19 possibly being a pullback area. Until we see lows in Sept. 30, we’re not totally sure and what the pattern is saying. Given at least a 3-3-5 pattern happening, the 2100 region is a minimum target if 2125 holds, we bounce and then fall another 50 points or so.

LARGER PICTURE: (9/22) The proportions of the weekly and monthly charts from the 2009 low suggest that the whole move up won’t be complete until 2018 at around at least 2409. For those waiting for a crash or major bear market, we think they will be disappointed. The wave-one low from 2009-2011 took three years. We have been looking for a January high toward at least 2320 once the Sept. pullback is over.