FOR FRIDAY: (8/4) Another employment report. Cycles are positive but we never rule out surprises. In any case we are coming in with a bias for long stocks, short gold, long dollars and long notes and long crude and that is mostly for the day.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR FRIDAY: (8/4) Our best read on the current pattern is a congestion between 2475-2465 that will be followed by new highs into early next week to at least 2494 or 2520. We might see 2465 as a place to buy in the morning. If there are any negative surprises from employment report, worst downside could be 2455, which is the most ideal place to buy. Not sure if the Asian or European trade will react to the Trump Jr. Grand jury news as they understand American politics less than we do and may overact to a headline. No reason to take a position overnight but no need to panic either.
Overall this market will not be a sale until after Aug. 15 so without a big break today, the chances of new highs are increasing.
NEAR TERM: Possible that the summer high came in last Thursday and we’ll have a series of secondary highs here and again next week before the start of a break first to 2390 and more likely to 2320 later in the month. Chances for new highs are possible if 2450 holds.
OVERALL: Last Thursday completed a 78% retracement of the wild range in the SP but not on NQ. Volume was thin on Thursday so not sure we should put too much store into it. Much under 2457 and the 3-wave pattern completion to 2455.50 would come in, and that’s a target low for Monday. Wednesday may have more of a shot at being lower. Even if a the summer top is in, we will get secondary highs and one always has to wait for them. We’ve been watching the week of Aug. 9-14 for them.
PATTERNS: We’re not closed to new highs to 2485 or 2494, as we have seen these 4th wave fake-outs happen before. Daily chart patterns still point to 2541. The greed and smart money will keep buying. If we hold 2450 and make a divergent high to 2493 by August 15th, we may have a move ideal price and time situation.
AUGUST OUTLOOK: Extended target up to 2520into the week of Aug.7-11 seems unlikelyh . . Daily chart pattern projecting 2542 now beyond our yearly target of 2520. Big picture may see the market holding up into the week of Aug.7-11 or even hold up till Aug. 15. Week of Aug.15-22 seems lower.
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 or 2525 will come in by August 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: Higher Friday.
