FOR WEDNESDAY: (12/6) Should be a mini-climax overnight for stocks and we should get a rubber-band bounce as is often the case here. Tensions over the debt ceiling may fray nerves. Gold looks like a bounce from Wednesday’s low into Friday so too late to sell.
DEC. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR WEDNESDAY: (12/6) The congestion triangle pattern is setting up with support at 2628.25 already hit and 3 waves down projects 2617 by Wednesday morning. Chances are that will be a buy for another surge in the congestion triangle. Probably still a few points to make overnight. Trade finally worried about the budget ceiling and it’s a concern but we do think it will get resolved, although the Dems may force the issue given their defeat around the tax bill. Some patterns suggest a bounce to 2622.50 holding and then a 10 point bounce and then a fall to 2600. That would really break the camel’s back and isn’t expected but we have to be cautious.
NEAR TERM: Telescoping nature of the breakout suggests at least two more highs and our projection to 2689 still should come in but will it take until later in the month? Doubt it will happen this week. The chances of a quick stopgap measure for the budget deficit so they can all do Christmas is also inevitable.
OVERALL: We’re seeing at least a 110-point fall from wherever the market stops but not that might even be 2689. It does look like a Christmas recovery will happen the week of Dec. 11-15 and possibly into the Dec. 22. There is not much time to fall but the week of Dec. 4-8 is very possible. It has been suicidal to top pick this market and it’s not due for a final top until June 2018.
CYCLES OVERVIEW: Lower into Wednesday; higher Dec. 10 and Dec. 16.
