(3/23) Not sure when a final vote will come in on Health Care but these things tend to drag out and thinking the market may sell first and ask questions later. NQ has already had a sucker punch bounce which makes me think that those late to the party may be disappointed. We’re going to be patient and have watched the cavalry ride the rescue much too often.
JUNE E-MINI S & P 500
S&P ANALYSIS FOR THURSDAY: (3/23) The trade was all over the place with reports of vote switching on the insurance plan. We don’t think it will pass, which means stocks will fall but cycles are volatile. The rally to 2348 could be just a 4th wave that should be followed by a 5th wave lower to 2318-20 or max. 2312. Once that comes in, a larger retracement is likely. Wondering if the market will take the market to 2320 and then buy it when the health insurance bill fails. Much over 2350 and we’re looking at 2357-8. We have seen so many of these sucker-punch rallies after a huge down day that we really have to be patient. Cycles aren’t that negative on Thursday but it may be more of a news impact situation.
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 are 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.
OVERALL: 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’re not bearish enough to get back to that just yet but a close under 2300 would open up the door to something much bigger.
BIG PICTURE: Until the market closes under 2295, we will not be able to confirm a weekly chart top and chance are we will see 2295-2300 and then get a recovery. NQ is much more likely to make new highs into May.
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 week of April 2-6 and watch pattern completions. Still have to pick your spots carefully.
CYCLES OVERVIEW: Congestive/higher and volatile into Thursday March 23; lower March 24 into March 26-27.
