FOR THURSDAY: (8/24) Trade waiting on Jackson Hole on Thursday and it’s still the dog days of summer. We have a sense that there will be enough surprises that we can’t be over-positioned in thin conditions.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR THURSDAY: (8/24) Minimum 3-wave pullback will go to 2430 but we’re open to more. The last two Thursdays were strongly down and one has to think that if Jackson Hole erupts with some unwanted surprises, there would still be a chance for 2400-5. Given that it’s hard to win and be a bear, it’s probably safer to buy that dip if it happened. Still, day-traders may make some money selling if the set-up comes in the morning.
The bears can make a case that the rally on Tuesday was only 3 waves and it could be a congestive 4th wave. The analogue cycle dominate into next Sunday are supportive and Central Bankers usually know how to deliver what the stocks like. That leaves us looking for a more solid breakdown below 2435 to turn bearish. Key support on NQ futures held at 5842 and it would not take much to tip the scales.
Cash left a gap at 2430 and but also one above at 2460.
Bullish pattern: If the market doesn’t breakdown and likes news on Thursday, major resistance is up to 2459-60 is resistance now and the more bullish patterns suggest a rally to 2463.25. We had thought that 2477 would be next on this move and computer models now suggest 2485-6. We’re open to 2520 into September. Our original monthly chart research had suggested a low on Aug. 21 and a recovery from there.
WEEKLY CHART: 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 but a secondary high to 2477 is more likely. In the end we still max. 2300-2320 as a fall correction target with a multi-year high due into 2018. Market needs to hold 2400 into Monday and shoot out of there to open up that scenario. World violence cycles are strong the next few weeks and it won’t take much to unsettle this tired market.
CYCLES OVERVIEW: Lower Thursday; higher Friday.