FOR THURSDAY: (10/11) Usually when the US spills, China and Europe follow overnight and then it snowballs for the US in the morning. We still sense that the market can recover out of this mess but have to leave it alone overnight and see what develops. A fall pullback for stocks would be healthy, and the first leg lower may be done by Oct. 26, then a bounce, and then a secondary low into early December.
DEC. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR THURSDAY: (10/11) We had been open for maybe 2845 but nothing of this magnitude. The chances of follow through in a huge way seem rather small, and traders who try to sell after missing this kind of a day usually get killed. Market now down 5 days. Weak bounce would go to 2802 and 2820 and then more unraveling would happen. Cash patterns suggest a rubber-band bounce to 2880 at most, and we’ve seen moves like that too often to ignore that. A cash bounce to at least 2820 and 2840 is going to happen. Daily chart pattern now projects 2725, which is what we were starting to see the last few days when we got a confirmation—which we got loud and clear now. Weekly chart patterns projecting 2633. Will probably climax within 1-2 days and then get a sucker punch. Hard to play overnight at key support, and it’s rare to get two of these kind of days 2 days in a row.
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