FOR THURSDAY: (1/26) Breakout move on stocks should not be top-picked. Should run out of steam by Friday or Monday and then congest before another push up. Cycles are still supportive into the week of Feb. 6 but we’ll watch patterns, and a double-top before considering shorts. Dollar could still go lower and gold still has a long way to go to get to 1160-1170 and crude may hold up another day before we can consider shorts.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Stand aside.
S&P ANALYSIS FOR THURSDAY: (1/26) Minor patterns point to 2198, a 6-point dip and a push up to 2308.50. Dips overnight might only go to 2292 or 2290.50 with support at 2286.75. Thinking a 25-point congestion triangle will again happen into the FOMC meeting next week but will it begin from 2298 or 2308.75? Another 46 points from that pullback would complete 5 waves up from the 2229 low and get the market to 2230. There still seems time to buy on Thursday but with upward momentum, will again be left at the dock if we do not buy overnight? Hard to chase so close to the minimum area.
OVERALL: Would think that a 4th-wave congestion of another 25 points will happen the week of Jan. 30-Feb. 2. Still should get a final push up to 2332 on cash. The MSCI All-Country World Index rose to 433.6, up 02%, to its highest level since June 2015.
NEAR TERM: Statistics around elections suggest a rally pausing about 2 weeks after inauguration and that fits with our cycles suggesting an early Feb. high. It’s possible that a key high for the winter could be in by Jan. 30 or Feb 6-10 and that highs into the week of Feb. 6-10 are secondary highs. We’re still open to a major pattern completion on cash at 2332 into early Feb. The last pullback 2nd wave on the weekly chart was a congestive fall over 10 weeks. If that is the case again, it could be that we have a 100-point congestive pullback into the week of April 9.
BIG PICTURE: (1/24) Patterns suggest two new highs to 2330 into early February before we really have to worry about a 100-point pullback that may happen into the spring. Feb. 9-March 30 may be the vulnerable period for that to happen but still could see 2380-2400 this year. If anything, any problems with China are likely to create big economic sneezes around the world and spillover problems, and Europe is a mess this year and contagion may cause problems the 2nd half of the year and possibly in February/March. Those of you look for a larger fall should focus on August-October but will be disappointed until then.
CYCLES OVERVIEW: Higher Thursday; lower Friday; higher Monday.
