FOR WEDNESDAY: (2/1) Presidential whiplash is not going to make trading easy for weeks or months. A tweet here, an executive order there and a counter coup defiant stand over there are making the news fun to watch again. When it starts happening with North Korea and China, we had better get our helmets. Currencies are the craziest of the bunch. Markets are overdone going into the FOMC announcement and given daily surprises, it’s hard to take positions home unless you really have a clear pattern and cycle. Still, it looks like higher stocks and notes for Wednesday, lower gold, recovering dollars.
S&P ANALYSIS FOR WEDNESDAY: (2/1) The worst two days of the week produced only a minor setback in the big scheme of things. We have first-of-the-month buying coming to the rescue and APPLE had great earnings after the close and the tendency has been to celebrate the FED out of the way. Cycles are supportive the next 2-3 days. Still, there are signs of a topping market and everyone is tiring of surprise tweets and executive orders and waiting for the next shocking shoe to drop. We need to continue to use rallies to put on position shorts but we can’t rule out a divergent high to 2304. We have 3-4 sessions to top-pick and can be patient. A bad reaction to FOMC might create a low to 2257.50 which they would buy.
OVERALL: Our longer-term work continues to point toward a 100-point S & P correction into early April in 3 waves with the first push lower into Feb 28 and then a huge and quick recovery into early March for a B-wave recovery. Given the atmosphere out there, we wonder if it will be more. Open to a major short into Feb. 26-28 but have to pick your spots carefully.
THIS WEEK: Would think that a 4th-wave congestion of another 35 points will happen the week of Jan. 30-Feb. 2. Still should get a final push up to a new high. If we get a quick recovery of 78% off of the 36-point range to 2290.50, then the 4th-wave congestion triangle will probably be assured and easy to play.
NEAR TERM: It’s possible that a key high for the winter could be in by Jan. 30 or Feb 6-10 and that highs into the week of Feb. 6-10 are secondary highs. We’re still open to a major pattern completion on cash at 2332 into early Feb but it is probably down to 30%. The last pullback 2nd wave on the weekly chart was a congestive fall over 10 weeks. If that is the case again, it could be that we have a 100-point congestive pullback into the week of April 9.
CYCLES OVERVIEW: Higher Wednesday-Friday.
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