FOR WEDNESDAY: (8/16) Waiting on FOMC for Wednesday but cycles seem the weakest if politicians get into any major fighting. S&P has the best chance for a pullback on Thursday but it may not be that big. Last day down for metals so let’s hope they don’t fall too much.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR WEDNESDAY: (8/16) Overbought conditions from last night may not allow too much upside. Key resistance on the SP futures is at 2474.50 and we had only 2479.50 as an upper target last night, which doesn’t have to come in.
Key support at 2460 would be a retest of the night session with major weekly chart support at 2457-58. We have a bias toward a down day on Wednesday but if there is a countertrend sale, it is from 247 and the market may not get up that higher overnight.
The chances of new highs to 2520 into September are still strong. At worse, congestion and inability to take out 2490 could lead to 2400 if we get some excitement next week which is very possible.
NQ is always a key. Futures patterns suggest 6009 for a new high but may be not on Wednesday.
OVERALL: 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: Lower Wednesday.