FOR MONDAY: (7/31) We crunched data for August and September and have some results below. Monday is end of the month fund profit-taking and rollover on August gold and more sluggish post-vacation energy. Even if we’re worried about end of the month profit-taking on stocks, cycles seem positive enough for some buying with Tuesday/Wednesday having a better chance to fall.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR MONDAY: (7/31) Thursday completed a 78% retracement of the wild range in the SP but not on NQ. Volume was thin on Thursday so not sure we should put too much store into it. Still, it ‘s probably enough to start a congestion triangle pattern that could then fall to 2460. Much under 2457 and the 3-wave pattern completion to 2450.50 would come in, and that’s a target low for Monday. Cycles for Monday aren’t that bearish so unless end of the month profit-taking comes in dramatically, the market may be sideways. NQ didn’t complete a retracement and may have the most upward potential on Monday. Tuesday/Wednesday may have more of a shot at being lower.
The type of reversal that we saw Thursday can invite “late to the bear party” action but we have often seen the funds come in and buy these dips as they did yesterday.
No new thoughts to what we saw last night. Even if a the summer top is in, we will get secondary highs and one always has to wait for them. We’ve been watching the week of Aug. 9-11 for them.
PATTERNS: We may be at the point of the move where a complicated 4th wave congestion triangle will set up which means a 78% retracement would stop at 2474.50, which is where it just about went to, and turn down. We’re not closed to new highs to 2485 or 2494, as we have seen these 4th wave fake-outs happen before. Daily chart patterns still point to 2541. The greed and smart money will keep buying.
NEAR TERM: Extended target up to 2520-42 into the week of Aug.7-11. Daily chart pattern projecting 2542 now beyond our yearly target of 2520. Big picture may see the market holding up into the week of Aug.7-11 or even hold up til Aug. 15. Week of Aug.15-22 seems lower.
BREAKDOWN POINT: Market will need to take out 2440 to issue a stronger sell signal. Doing some more work on longer-term patterns. At least 2493 or 2525 will come in by August high but pullbacks into October will probably hold 2325 so crash scenarios are just not there but a 10% correction into the fall will seem like a lot for a market that has only 1 elevator up button. New high toward May 2018 should go to at least 2560-80.
WEEKLY CHART: We are not thinking that the market will fall apart dramatically in July, but we doubt that there’s enough time and room for 2520 to come in this summer before things get complicated August-October. Seeing lots of congestive action and it may not fall apart until after Aug. 15.
CYCLES OVERVIEW: Sideways to higher Monday; lower Tuesday/Wednesday.
