FOR TUESDAY: (1/10) Failure to continue higher for stocks was a minor yellow flag and lower crude into Wednesday and higher T-notes all suggest that we may see a correction on stocks on Tuesday. We’re going to exit longs but if the market holds up well on Tuesday, we will buy them back as stocks seem higher Wednesday and Thursday. Many markets seem a bit of a congestive muddle this week so we’ll have to see what’s developing after congestion works itself off this week.
MARCH E-MINI S & P 500
SWING TRADING RECOMMENDATION: Hold March S & P e-mini longs from 2266.50 with a 2259.25 stop. Exit 2269.
S&P ANALYSIS FOR TUESDAY: (1/10) We will put in an exit order overnight as we don’t like the way the market is acting and it seems most vulnerable on Tuesday. We don’t like falling crude or projections on T-notes up the next few days. The push above 2273 and new highs on NQ 100 are confirming friendly pattern for at least 2290 this week and 2332 on cash by early February. Tuesday seems the most vulnerable day of the week but until 2257 comes out, we would have no need to worry, and even then a pullback to 2240 would be healthy—but unlikely. We have seen Monday malaise so often that we could get a delayed reaction for higher prices. Resistance is strong at 2279-80 and 2289. Our focus is on buying dips until we get a more serious break below 2256.
BIG PICTURE: (1/9) 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 Feb./March. For now, until 2332 on cash gets completed, we can continue to trend trade and buy dips.
WEEKLY CHART: (1/6) 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. Cycles in February seem troubling and March is often seasonally lower. That means that much of the current rally will be over in January. Still, it seems that 2380-2400 is very likely by June and then would be followed by a pullback to 2020 later in 2017 and 2520 might take until 2018 to happen.
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: Topping/lower Tuesday
