FOR TUESDAY: (3/28) Continued 2-day retracement likely for all overdone markets and then new thrusts into Wednesday/Thursday. S & P patterns are fairly clear as are T-notes. We still like the short side of crude if we see a big enough bounce. Gold may have a last buy setting up but minimum target is in.
JUNE E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR TUESDAY: (3/28) We had enough conviction to be short this market using SDS on our ETF timer but futures have hit minimum support at 2318 and are doing a 3-wave bounce that should stall in the 2350-56 region before the next lower comes. Resistance overnight at 2343 and support at 2332. The proportions of that for 3 waves up would project 2357. We have thought that Tuesdays looked higher and Wednesday and Thursday look lower. The chances for 2309 or 2305 coming right away are out the window with the close above 2338.
BIG PICTURE: Given that the 2300-2305 will be in quickly, we have to think that a 3 wave bounce of 50 points will be followed by at least another 100 points lower to 2250 by the time we hit cycle lows in early April. The failure of the healthcare bill is suddenly casting doubt onto all hopes that have predicated this rally. It also means that that May secondary high may hot have much chance to take out 2400 and that the larger focus should be on the October low toward 2150 and 2050.
SHORT-TERM: (3/22) Seasonally, late March is often lower for stocks and we had started to give up on a deeper break and had been looking for 80 points on the S & P for a while, and we are not bearish enough to get back to that just yet but a close under 2300 would open up the door to something much bigger. Given that the market has such downward momentum, we wonder if we’re starting a 160-point correction toward 2240. The most obvious target is a fall to 2295-2304 into March 31 and then what kind of a bounce we get into April 7 and April 15 will be revealing. We expect some kind of secondary high into May 12 and possible it would be a new high.
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 2050 is possible into October for a 15% correction and cycle low and if the market closes under 2300, we would see 2200. Too early in the game to get too beared up but you can favor shorts into the week of April 2-6 and watch pattern completions. Still have to pick your spots carefully.
CYCLES OVERVIEW: Higher Tuesday; lower Wednesday/Thursday.