OR FRIDAY: (5/5) We found a larger cycle that’s creating skittishness in traders into the weekend and hopes for rallies that we had seen on many markets into Friday seem like dreams. Thinking we will get end of the week short-covering for crude and the dollar and metals before the French election and metals look higher next week and stocks lower. Always hard to play these political events.
JUNE E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR FRIDAY: (5/5) We got stopped out in profits but the market recovered strongly and we’re not convinced that it has to fall sharply on Friday, although we do favor lower prices next week and the market is tiring. Still could have a quiet range between 2380 and 2390 but we do see a break next week to 2368 and 2365. Still should see a divergent high by May 18 to 2405 or 2417.
OVERALL: We had a yellow flag yesterday with NQ but in looking at it today, I can make a case for a 5rg wave up to 5707 that could be the mid-May high. Worst corrective action there is probably to 5577. I talk about NQ because it is leading the market up and is where the smart money is going and where the speculative money continues to pour into and it has kept me out of getting bearish the weaker S & P.
WEEKLY CHART: Maybe a 15% fall from June to October but a seasonal drop usually happens after mid-June. NQ has clearly needed new highs to 5707 and probably more before the S & P will cave in.
LONGER TERM: (4/26) 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 2150 is the most likely first downward target into September/October if the market can close below 2300. May not get the sell signal until June.
CYCLES OVERVIEW: Lower Thursday night; sideways Friday; volatile Sunday; lower into May 11.
