FOR TUESDAY: (4/25) Lots of Central Bank meetings by Thursday with Bank of Japan and the ECB. We think that the cycles favor a budget deficit resolution by late Friday night, which just may mean kicking the can down the road but the market is fine with that as long as stocks go higher. Dollar needs to go to 9800 and stocks had enough of a breakdown as seen in NQ that our projection for NQ highs in May is still on target.
JUNE E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR TUESDAY: (4/25) We have more of a bias toward buying on Tuesday looking for 2381 and possibly 2388 if they get good news. The breakout above through the congestion zone confirms the bullish outlook for a divergent high into May as 2318 never came out last week and had been the minimum retracement area. While the budget crisis is still hanging out there into Friday, a Republican Congress should be able to pull out something. The 2381 region will be hard to take out if there’s any early buying overnight. Market should fill at least the 2358 and 2352 gap areas but starting to look like Wednesday may be a better day for that to happen. Hard to trade now. With North Korea hanging over the market and debt ceiling there’s always a chance for fireworks but the trade buys it anyway. Will look for new clues in the morning.
OVERALL: It’s more probably that possible that if 2318 doesn’t come out then the divergent high to 2417 will manifest and NQ has clearly needed new highs to 5670 and is stronger for a May high. We do think war cycles are tense through next Wednesday but starting to think even if shots fire, that maybe only a 30-50 point pullback will happen and then war is always good for defense industries and the market anyways.
LONGER TERM: (3/27) Still can’t officially say we have a weekly chart sell signal until 2300 comes out on a closing basis. It may be a while before we know if a weekly chart top is in. Expecting a May high and a new NQ high unless NQ takes out 5200–and if that’s the case, we’ll get a divergent S & P high to maybe 2420. Expecting that 2150 is the most likely first downward target into June if the market can close below 2300. May not get the sell signal until June.
CYCLES OVERVIEW: Higher April 25; lower April 26.
(Note: cycles for the US and world are complicated and tense into April 26 and could override normal stock market cycles.)
