FOR FRIDAY: (8/11) We won’t be bored with the dog days of summer through Labor Day now and I suspect traders are happy—it just makes taking stuff home harder and then getting in again in the morning. Not sure that Trump or Korea will give up any male/territorial ground and the better days for something happening is Friday/Saturday–and if not, we think it will intensify into Aug. 21. Possible it could have a build-up and release of tensions like the 1990 Gulf War and there are some interesting cyclical parallels. We’ll do our best to deal with intraday volatility.
SEPT. E-MINI S & P 500
S & P ANALYSIS FOR FRIDAY: (8/11) We missed shorts except for our ETF traders on Wednesday, as we hate chasing this market and there are so few days that it doesn’t bounce back and when that rebound doesn’t happen, it’s in real trouble. Intraday at 10:45 am, we had projected 2432, which came in perfectly. Our day-trade service wanted to sell 2457 off of 2448.50 but it missed by 3 ticks.
What’s next? Our geo-political cycles are still intense until Aug. 26 but things may not seem to ease until Labor Day so without N. Korea stepping back in a big way or China showing who is the Big Daddy, 2414 will come in quickly and that leaves 2320 to come in next week.
Next shorting areas are 2443.75 and 2451. The risk/reward gets more problematic and we ‘ve seen too many sucker punches but if there’s no resolution overnight, then no one is going to want to be long over the weekend break.
NQ PARALLELS: NQ always tends to give it up more easily these days. We had suggested a 250-point correction would happen on NQ this month at least and at the rate this market falls, that may be nothing.
OVERALL: At some point next week, some major event will start impacting the markets and give a tired market a chance to fall. We estimate a drop to 2320 quickly. We wonder if it will be similar to the tensions building up into the Gulf War in 1990 where the market fell sharply into the fear and then rallied sharply when it was clear we would win. The parallel cycles the next few weeks are strong if we do take out North Korean missile launchers.
PATTERNS: Still possible that if 2428 holds that the market would complete a 60-point, 4th- wave and bounce but we would have to get something definitive from N. Korea and the battle of egos is more likely to continue given the immaturity going on over there. If you remember that when his father was in charge, Kim Jong-un was a manic video-game player and unfortunately he hasn’t grown up.
CYCLES OVERVIEW: Congestive topping into Aug. 12-15; lower into Aug. 21.