FOR MONDAY: (1/23) We expect lower action with stocks on Monday from potential unrest from DC and weak cycles. We want to sell gold on rallies and stay short on oil. Dollar is still in transition but should resolve back to upside eventually.
MARCH E-MINI S & P 500
SWING TRADING RECOMMENDATION: Sell March e-mini S & P at 2266.50 with a 2274.50 stop. Take partial profits at 2254.75 and 2249.75.
S&P ANALYSIS FOR FRIDAY: (1/23) In the end, nothing happened on inauguration day. Three waves down would project 2254. The 2249 or 2237 area is less likely but the market is probably a short near the open and the chance of 2278.50 coming out is rather small. Continued sales for day-traders have worked all week in the 2267-69 region and that could again be the case on Monday. We still favor at least one more new high to 2300 into early Feb. before a larger profit bout will set in for 6 weeks. Chances are angry protests in Washington will upset the market.
OVERALL: Statistics around elections suggest a rally pausing about 2 weeks after inauguration and that fits with our cycles suggesting an early Feb. high. In the end the anxiety and uncertainty cycles are increasing and China will continue to get worse and that may just be too much for the market. Is the honeymoon over with Trump? The reality is hitting that what may be good for the populace with returning jobs and lower drug costs may not translate into higher profits for corporations, and that’s the Big Elephant in the room that Wall Street is sensing.
WEEKLY CHART: We still favor the pattern suggest a 100-point decline into March but will get 1-2 more new highs first? If not a larger 4th-wave pullback to 2225 or 2183 on futures may have started. More inclined to expect 2332 on cash complete probably by the first week of February. Strength in Nasdaq is suggesting that sector rotation to oversold techs that didn’t benefit from Trump bump as much are coming more alive now, and very clear new highs there remind us not to get caught up about profit-taking just because 30 DOW stocks are at 20,000.
BIG PICTURE: (1/9) Patterns suggest two new highs to 2330 into early February before we really have to worry about a 100-point pullback that may happen into the spring. Feb. 9-March 30 may be the vulnerable period for that to happen but still could see 2380-2400 this year. If anything, any problems with China are likely to create big economic sneezes around the world and spillover problems, and Europe is a mess this year and contagion may cause problems the 2nd half of the year and possibly in February/March. For now, until 2332 on cash gets completed, we can continue to trend trade and buy dips.
NEAR TERM: (1/6) We still would expect new highs toward 2296 with additional resistance at 2330. It would seem that 5-wave up from the election low would be complete at 2330 and set up larger fall. Eventually we might get a 110-point correction from 2330 to 2220 and could take a few months which we need to confirm. Cycles in February seem troubling and March is often seasonally lower. That means that much of the current rally will be over in January. Still, it seems that 2380-2400 is very likely by June and then would be followed by a pullback to 2020 later in 2017 and 2520 might take until 2018 to happen.
MONTHLY CHART PATTERNS: 2420 or 2520 isn’t out of the question before this bull market ends and it takes a long time to turn an ocean liner around in so V-tops and crashes are not to be looked for and publications that steer you that direction are being too sensational.
CYCLES OVERVIEW: Lower into Jan. 23.
