FOR TUESDAY: (8/1) First-of-the-month volatility is likely, as we often get larger-range days the 1st day of the week before employment report. Sometimes we can get a 20-30 point range in the S & P but then again the VIX is so low we would be thrilled to get 15. Dollar breaking down isn’t letting us in and gold and silver seem bid this week so maybe not the congestion we are used to.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR TUESDAY: (8/1) Market was fairly quiet and mostly came back from weak early action. NQ didn’t quite hit 5939, for a 62% retracement and chances are less that it can the next few days. The upper target on NQ 5963 and NQ will often lead the way up or down. We favor a drop to 2455 or 2450 on Tuesday/Wednesday. Three waves up on SP futures projects 2477 and missed by 2 points. Taking out 2482 would lead to a surprise. We’re open to selling on Tuesday although have to be careful the 1st of the month and selling from good risk/reward levels. Not impossible to still see 2477.
OVERALL: 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. Tuesday/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 Aug. 15, 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 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: Lower Tuesday/Wednesday.
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