FOR MONDAY: (3/5) From what we can tell, the Italian election isn’t a big deal and no party is likely to get a majority, which will ultimately be good for a coalition government. The trade war is heating up, with Europe going to tax bourbon, Harleys and blue jeans. Studies from 2002 note that Bush’s 30% tariff on steel back then was a major factor in contributing to a 30% fall in the stock market into 2003. We’re so used to surprises that we’re not going to take a lot of positions going into Sunday. The week of employment report can be congestive with a big-range Monday but not sure big ranges mean anything anymore.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR MONDAY: (3/5) Market didn’t break to 2630 and the rebound into the close was strong but still meaningless, as it didn’t take out 2700. Once that does happen, a move to 2735 will happen and then the market can fall to 2597. Cycles are positive this week and the worst may be over so much above 2750, and we may change our forecast.
The congestion triangle theory is still strong at work and although we thought that 2590-2600 could happen later in March, if the trade gets freaked out, it could happen quickly and then be followed by a strong recovery. If we do see 2590-2600, best guess for a cycle low is into March 13. The action of the last few days is the kind that we get in whippy 4th-wave triangles, and we just missed the ideal rebound zone at 2802 by 15 points. So the rubber band will still come in from 2590-2600. We often get retracements before the new lows so a recovery to 2735 or higher wouldn’t be a shock next week.
CYCLE SYNTHESIS: Higher Sunday; generally higher into Thursday; lower into March 14-15.