FOR MONDAY: (2/5) The Circus should continue next week with the budget ceiling pending and we can’t imagine that the Dems will be cooperative given the anger that the memo is likely to drudge up. Expect another government shutdown and maybe it will last longer into Feb. 15. The latest proposal is another month of “can-kicking.” May get a delayed reaction from Asia on Sunday to the US meltdown and the political crisis here, and we have to think that even though key support at 2740 may lead to a dead-cat bounce, it won’t be anything final.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR MONDAY: (2/5) Bears dream of days like today but we get them so rarely and they don’t last. Computers suggest that 2842.50 will hold with a 4th-wave bounce to 2774.75 or 2487.25, with parabolic resistance at 2802.50 needing to come out to right the ship. The problem is that we have the budget ceiling vote and volcanic spewing from Congress to deal with, and a break of 2730 could lead to 2682. The larger issue is whether a correction from the Trump election rally is starting, and we can’t declare that yet unless the market closes below 2590. Chances are the S & P will be a buy on Monday in the 2742 region because it will be the 6th day down and someone will go bargain hunting.
NEAR TERM: Not far down the road is another debt ceiling date on Feb. 8 and we have an inclination toward seeing a Feb. 9 low.
OVERALL: As far as we can tell, the worst-case scenario a larger 4th wave would hold 2742 and now extended to 2662.75. We have looked at Feb cycles and we are only open for another week slide into Feb. 9th if we get a secondary failure. A congestive 4th-wave pullback would be healthy here and it could be in wild swings. Have to see if we close under 2640 on Monday.
CYCLE SYNTHESIS: Lower into Feb. 9.