FOR WEDNESDAY: (10/18) Chances are nothing will happen with N. Korea but it’s still pretty dicey and Wednesday/Thursday offer some chance for volatility. We’re trading off of pattern and minor cycles for stocks. Gold and silver issued a major sell signal and crude may hold up until Oct. 22.
DEC. E-MINI S & P 500
S & P ANALYSIS FOR WEDNESDAY: (10/18) The market continues to show signs of a distribution top and continues to tire and has to be nervous before North Korea’s celebration on Wednesday. We don’t like cycle but the market has a one way mission so it’s rather bold to be top-picking looking for 20 points. It may come on some bad news headlines and will get gobbled up again. Possible for a divergent high to 2459.75 coming in overnight.
Cycles at best are sideways and the chances of 2460-62 coming out are very small. NQ patterns project 6131 if we get a divergent high. We have moved stops down.
OVERALL: Running out of time for this market to go higher without a 20- or 30-point break. The telescoping nature of the patterns might suggest 2-3 more new highs to get the market up to 2580-2600. While cycles are very dicey the next few weeks, without a major international crisis with Iran or Korea to rattle the markets, I suspect the trade will continue to do what it does. Market looks like it is doing a distribution top but needs to take out 2538 to have a minor breakdown. It’s not confirmed on NQ. We found a new cycle low into Wednesday. Tight ranges continue to point toward this market tiring.
The most bullish pattern would allow at 20-point congestion triangle to happen between 2540-2560 and then new highs. A 30-point break is also very possible but waiting for much more may be too much. Watch NQ 6145 for a pattern completion and there is money to be made on the upside there for the brave.
LONGER-TERM: While we should get a 20- or 30-point pullback, the chance for something bigger may not come until 2580-2600 comes in. Cycles are intense in the world but the market continues to ignore them. At best if we are to get a pullback to 2320, it may come from 2600 and it may take more time to manifest with December being vulnerable with the budget deficit.
CYCLES OVERVIEW: Lower into Wednesday.
