(3/27) With health care bill dead for now and perhaps moving to the Wall and border issue next, will the trade just ignore the failure? Cycles for stocks are still pretty weak next week and probably the following week so our guess is that things will get unnerved. Still, with just slight new pattern completions on a lot of markets, larger retracements need to happen. Markets are very volatile for the next few sessions so expect wild moves and unexpected news so be careful!
JUNE E-MINI S & P 500
SWING TRADING RECOMMENDATION: Sell June e-mini S & P at 2342.50 or better with a 2353 stop. Exit 2328.50. Cancel trade if 2337 hits first.
S&P ANALYSIS FOR MONDAY: (3/27) The break to 2331 on the failed health care bill confirmed our bearish cycles—and they do continue early next week. The chances of a fall to 2318-20 and 2302-5 are stronger than a rally to 2372. Larger cycles suggest that the market will break into the first week of April and holding 2295 will be important to allow for a secondary high into May. Range trading again today around news.
Market not likely to take out 2351 and a fall to 2327 seems next. Chances are you need to get short in the night session and may not do much better than the close.
NEAR TERM: Cycles favor the push lower to 2328-30 and then a recovery to 2372-75 part of next week but it’s unclear how one can get a handle on trading in case there are any surprise developments overnight. We feel like it’s safer to err on the short side. We bought SDS for a 2x short ETF to cover the short side, as the cycle lows into early April suggest a breakdown.
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: (3/22) 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
