FOR THURSDAY: (1/12) Not totally following the logic of the dollar on Wednesday and cycles are volatile still for the greenback on Thursday. We have a bias toward higher stocks, topping T-notes and lower gold and higher crude but volatility is a bit crazy and not likely to let up.
MARCH E-MINI S & P 500
S&P ANALYSIS FOR THURSDAY: (1/12) Resistance at 2272.75 and 2277 with 5 waves higher projecting 2283-4. Bearish RSI divergence on NQ chart is troubling as is failed toppy action but they are still buying the dips and cycles are strongest on Thursday for a rally. Market held the key pattern completion in the 2255-2256 region and had a strong close. We still want to see 2275 come out and new highs in NQ is a reminder that our friendly cycles are on track this week. Trump’s proposals on drugs hurt drug stocks bad. Reminder that people may better off under Trump but will corporate earnings with higher US wages and competitive pricing?
OVERALL: 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.
WEEKLY CHART: (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.
