FOR WEDNESDAY: (8/2) Cycles for today offer the best chance for stocks to retreat if DOW mania and APPLE to 1000 don’t take over. The rest of the markets are usually congestive into employment report but at the moment it looks like gold and silver are lower on Friday and the dollar higher and T-notes lower and stocks higher.
SEPT. E-MINI S & P 500
SWING TRADING RECOMMENDATION: Hold Sept. e-mini S & P shorts from 2476 and 2475.50 with a 2483.50 stop.
S&P ANALYSIS FOR WEDNESDAY: (8/2) We had decent profits most of the day from the top of the range. The 29/30 day cycle is reliably lower on Wednesday unless DOW fever continues to take over as sector rotation out of toppy NQ goes into Blue Chips. We’re ok being short overnight.
OVERALL: S & P completed a 3-wave rally overnight to 2477.00. We didn’t have a sell order up there and have to hope for a retest high to get short. Possible that the summer high came in last Thursday and we’ll have a series of secondary highs here and again next week before the start of a break first to 2390 and more likely to 2320 later in the month. Chances for new highs are possible if 2450 holds sell and some wonderful news creates a divergent high to 2493. We favor a drop to 2455 or 2450. Taking out 2482 would lead to a surprise.
OVERALL: Last 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. Much under 2457 and the 3-wave pattern completion to 2450.50 would come in, and that’s a target low for Monday. Wednesday may have more of a shot at being lower. 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. 9-14 for them.
PATTERNS: 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. If we hold 2450 and make a divergent high to 2493 by August 15th, we may have a move ideal price and time situation.
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 till 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: Lower Wednesday.
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