FOR THURSDAY: (12/29) We got too complacent about this week after a nothing day on Tuesday and quiet action overnight on Tuesday night and the trade decided to start taking profits.
MARCH E-MINI S & P 500
S&P ANALYSIS FOR THURSDAY: (12/29) Our original work had stocks lower this week but we got lulled to sleep by action on Tuesday and Tuesday night. Still, the market has fallen to key support at 2243 which we discussed for over a week and has not taken it out. The bearish pattern suggests a recovery to 2257 and then a pullback to 2230, and that doesn’t even mean that much. We still think 2295-2300 has a good chance in the New Year but how much more profit-taking will set in after the largest drop since October?
OVERALL: We do see 2295-2300 as the next pattern completion to the upside into early January and if we have a surprise pullback the market would have to take out 2240 to issue a sell signal. Any surprises and a break below 2240 might start leading to 2230 and then 2219.
BIG PICTURE: Patterns suggest two new highs to 2300 and 2330 into early January before we really have to worry about a 100-point pullback that may happen into the spring. Unless there’s something really wild coming, our focus for swing trades will be to buy a pullbacks.
WEEKLY CHART: Market has to hold 2240 and probably the market will not get close to that level. We still would expect new highs toward 2296 with additional resistance at 2330. It would seem that 5-wave up from the election low would be complete at 2330 and set up larger fall. Eventually we might get a 110-point correction from 2330 to 2220 and could take a few months which we need to confirm in the cycles. That means that much of the fun of the current rally will be over soon. Daily cash charts starting to project 2300 and weekly charts 2335. We have a bias for higher prices from FOMC into Dec. 22 but we’re not clear how long it will take to do the last push up to 2330. Could be as late as Jan. 7.
MONTHLY CHART PATTERNS: 2420 or 2520 isn’t out of the question before this bull market ends and it takes a long time to turn an ocean liner around in so V-tops and crashes are not to be looked for and publications that steer you that direction are being too sensational.
CYCLES OVERVIEW: Congestive profit-taking into Jan. 2.