FOR TUESDAY: (8/15) (8/14) Some saber-rattling already overnight. Will it reignite fears quickly? Thinking a volatile week but these sucker punch weeks often end higher and option expiration is higher and the market often goes up for them. Hard to hold and trade overnight but we’ll look for key patterns to keep us in tune.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR TUESDAY: (8/15) It was a terrible day trading on Monday and as always the end of the world scenario leads to massive short-covering when everyone is caught with their pants down. Resistance is up to 2466.50-2468.50 and then up to 2475.50-2478.50. We have been a victim of these sucker-punch days and usually they don’t stop. Thinking higher Tuesday and retracing Wednesday. Is the thought that they will give China 2 months to get the job done with N. Korea as Trump presses hard on trade sanctions to wake China up?
NQ is always a key. Futures patterns suggest 5950-66. If that happens, it would be a game changer and we’ll have to go back to the idea that the push last week on the SP was a minor 4th wave and that 60-point pullback to the 50-day average was a buying opportunity. Won’t do anything overnight. Parabolic support at 2462 and key MA support at 2459.75. Taking out 2455 would start to look a bit more of a problem but not really.
OVERALL: Stocks only fell in 3 waves and the chances of the S & P falling in 5 waves to 2418-20 now are down to 38%. We had noted in our monthly newsletter that a 60 point fall could be a 4th wave (and that is all we got on SP at 59 points) and that new highs to 2520 were possible if the news would shift and that is not out of the question for a Sept. high if the S &P can continue to ignore headlines. The alternative pattern to fall to 2420-2400 is just less likely with option expiration and we’re now assuming that cycles are inverting and going higher into next Sunday.
Still, Aug. 9th was Bradley Major turn date that we had seen for weeks and the high on the S & P came in at 2488.75. We’re so used to sucker punches from the Plunge Protection team that we never quite trust the bears lead on this one. Korea hangs in the balance but Russia and China are trying to prevent a military confrontation and the Secretary of State continues to pursue diplomatic ties.
NEAR TERM: We’re assuming that the bigger break will happen in October if no bombs go off. The 5665 region is very key on NQ 100 futures and that will have to be watched carefully also.
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. In the end we still see only 2300-2320 as a fall correction target with a multi-year high due into 2018.
CYCLES OVERVIEW: Sideways to higher Tuesday; lower Wednesday.
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