FOR WEDNESDAY: (8/9) Trade upset by more saber-rattling with North Korea and given an intensification of cycles into Aug. 26-27 around this, not sure it will end well. Stock market had Bradley turn for Wednesday. The market didn’t fall enough to confirm a reversal but the continued low-volume and tiring action will lead to profit-taking and something more formidable to the downside probably starting on Aug. 15-16 into Aug. 21. Markets may get a bit unhinged by North Korea so the easy trading may be ending but some traders like volatility so it will come Aug. 15-31.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Stand aside.
S & P ANALYSIS FOR WEDNESDAY: (8/9) We took a 6.50-point loss on shorts and hope you did better as our partial profit-take missed. Intraday we pointed to resistance at 2489 and in the morning we noted late afternoon weakness but we stopped top-picking years ago and missed the 20-point fall from highs. We never sell a first high. The upper target of 2493 didn’t come in but NQ did finally retrace 78% and came off and continues to show signs of tiring.
OVERALL: At some point next week, some major event will start impacting the markets and give a tired market a chance to fall. We estimate a drop to 2420 quickly into Aug. 21 once this market tires out. Cycles today are sideways but could turn more bearish late in the afternoon. Given ranges, we’re not quite at a point where we’re expecting any big flushes but when they do happen, they happen in thin volume and are bought back. Overall this market won’t be a major sale until after Aug. 15 but we’ve seen these markets top out early.
SHORT-TERM: Possible that the summer high came in on July 27 but the DOW is still making new highs, as sector rotation is happening as funds look for something to buy. We’re in the process of doing a series of secondary highs that should complete by Aug. 15 and then start a break first to 2420 and more likely to 2320 into October or early November. Chances for new highs are possible if 2520 into September if there’s some bizarre good news like passing health care. Week of Aug.15-22 seems lower. Looking at cycles and patterns, it could be that the S & P does a 4th-wave minor fall of 60 points toward 2420 into Aug. 21 and then recovers out of there into September we could still get to 2520, and that the biggest break to 2320 might happen in October and into early November. We have to see the context and see how bad geocosmic events are going into Aug. 21.
PATTERNS: We’re not closed to new highs to 2493, as we have seen these 4th wave fake-outs happen before 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.
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 will come in by Aug. 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.
CYCLES OVERVIEW: Congestive topping into Aug. 12-15; lower into Aug. 21.
