FOR TUESDAY: (8/29) Asia is all upset overnight with the N. Korean missiles but if the market gets trashed overnight, it may have nowhere to go in the morning but fill gaps. Hard to chase at night unless you stay up all night. We do have dollar weakness and stock weakness all week so we can sell bounces into gaps, and gold still has 4-5 more days to the upside.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR TUESDAY: (8/29) S & P gapped down 10 points at the open and has fallen 20 points since the close on N. Korea’s continued acts of infantile aggression. Haven’t seen the market this spooked by it. We had a bias for lower prices the rest of the week and now it seems 2405 will be easy. The question is whether the trade buys this and turn it into a sucker punch overnight. We have a bias for lower prices this week. The market left a gap at 2438 with key support at 2420 and 2416 overnight. Always hard to play these news items. We’re ok selling recoveries.
NEAR TERM: We are open to 2405 even by Labor Day. Not sure the Hurricane will be good for the economy and that may set a messy tone the week. If we really want a serious buy, we need to wait for 2405 and as late as Labor Day. War aggression could increase given provocation.
Given past history, the bears can make a case that the rally was pretty terrible and only 3 waves and it could be a congestive 4th wave.
OVERALL: We’re tempering our bullish interpretation until we see 2400-2405 hold into Labor Day.
WEEKLY CHART: There’s still a good possibility that based on patterns that the current fall is a 4th wave and that a new high to 2500-2520 would be possible in September but a secondary high to 2477 is more likely. In the end we still will have a minimum fall to 2360 or max. 2300-2320 as a fall correction target with a multi-year high due into 2018. Market needs to hold 2400 into Labor Day and shoot out of there to open up that scenario.
CYCLES OVERVIEW: Lower into Wednesday; recovering Thursday/Friday.