FOR WEDNESDAY: (5/10) We have a bias toward lower stocks on Wednesday but we don’t think the move higher will be over until next week. The dollar looks higher all week and that doesn’t jive with a 2-day bounce for gold. Luckily the news front is relatively clear compared to past weeks.
JUNE E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR WEDNESDAY: (5/10) Market still has to take out 2390, which it did briefly to confirm a top. NQ got up to 5687 and made new highs and SP couldn’t squeeze out more than 2400, which everyone wanted to sell. Tuesday was the best day to rally so the chances of lower action on Wednesday are stronger. In the end, not much happening and a move to 2365 would seem rather dramatic now and we need a 40-point retracement on NQ, which may come from 5700. The equivalent fall for SP would be about 17 points from the highs suggesting that only 2380-2 would hold on Wednesday. Not seeing any point in playing overnight here.
WEEKLY CHART: Maybe a 15% fall from June to October but a seasonal drop usually happens after mid-June. NQ has clearly needed new highs to 5707 and probably more before the S & P will cave in.
LONGER TERM: (4/26) Expecting a May high and a new NQ high unless NQ takes out 5400–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 September/October if the market can close below 2300. May not get the sell signal until June.
CYCLES OVERVIEW: Lower into Wednesday; higher into Thursday.
