FOR FRIDAY: (1/20) Our sense is that Trump will get inaugurated and that if there‘s violence it will be more likely on Saturday during the marches. Still, protest is not new to inaugurations and we have seen it with Bush and a few others. Cycles are not that bearish on Friday but we’re open to the market falling into Sunday/Monday as it continues to be congestively toppy and needs a larger 4th-wave fall. We would be surprised to get more then 2237 but it’s not impossible. Probably have to scale into other markets. There’s always some major event to wait for next but the technical patterns are telling us to get long dollars, and that a retracement on gold is needed, and that the S & P needs a new high to at least 2300. All of these moves could happen over the next few weeks.
MARCH E-MINI S & P 500
S&P ANALYSIS FOR FRIDAY: (1/20) Day traders sold the 2268-9 region and it worked but the market bought it back the last few hours but finally 2259 came out. We had thought we could see 2249 into Monday and maybe more is possible. If the inauguration goes without any problems, maybe the trade will celebrate and take the market up to 2269.50 again but unlikely to take that out and the March on Washington and many protesters there isn’t going to go without notice by the time the markets resume on Sunday/Monday.
Still expecting a break to at least to 2237-40 into Monday but not sure we can count on much more. In the end the slight new high to 2300 needs to come over the next few weeks, and it may happen very slowly.
OVERALL: Statistics around elections suggest a rally pausing about 2 weeks after inauguration and that fits with our cycles suggesting an early Feb. high. In the end the anxiety and uncertainty cycles are increasing and China will continue to get worse and that may just be too much for the market. Is the honeymoon over with Trump? The reality is hitting that what may be good for the populace with returning jobs and lower drug costs may not translate into higher profits for corporations, and that’s the Big Elephant in the room that Wall Street is sensing.
WEEKLY CHART: We still favor the pattern suggest a 100-point decline into March but will get 1-2 more new highs first? If not a larger 4th-wave pullback to 2225 or 2183 on futures may have started. More inclined to expect 2332 on cash complete probably by the first week of February. Strength in Nasdaq is suggesting that sector rotation to oversold techs that didn’t benefit from Trump bump as much are coming more alive now, and very clear new highs there remind us not to get caught up about profit-taking just because 30 DOW stocks are at 20,000.
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 February/March. For now, until 2332 on cash gets completed, we can continue to trend trade and buy dips.
NEAR TERM: (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: Lower into Jan. 20; lower into Jan. 23.
