FOR THURSDAY: (1/5) Stocks remain bid and if 2270 comes out on the S & P, then 2295 won’t be far behind. The dollar trend lower seems clear into Friday and even part of next week and the higher T-note trends also seem clear. Crude got a bullish API but products outweighed with a bad one so will see what they pay attention to. Still favoring lower gold into Friday.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR THURSDAY: (1/5) Yesterday’s pullback to 2239 was enough to be complete retracement patterns but not enough to rule out the bulls taking the market to 2295-2300. Clear pattern completion at 2270 at least but will the market go to 2295 before employment numbers or will see a retracement first to 2252-55? Lately Thursdays have remained positive so we’re not expecting any major sell-off. Given the first week of January buying, not in a rush to be selling and the surprise may continue to the upside on Thursday with Friday more volatile.
OVERALL: Cycles are at odds with many pointing higher into Friday and one major one pointing lower. While new highs are coming in 2017, the issue is will we get some complicated topping wedge pattern, which might allow a deeper correction in January to 2160 this month.
BIG PICTURE: Patterns suggest two new highs to 2300 and 2330 into early January before we really have to worry about a 100-point pullback that may happen into the spring. Unless there’s something really wild coming, our focus for swing trades will be to buy a pullbacks.
WEEKLY CHART: We still would expect new highs toward 2296 with additional resistance at 2330. It would seem that 5-wave up from the election low would be complete at 2330 and set up larger fall. Eventually we might get a 110-point correction from 2330 to 2220 and could take a few months which we need to confirm in the cycles. That means that much of the fun of the current rally will be over soon. Daily cash charts starting to project 2300 and weekly charts 2335. We have a bias for higher prices from FOMC into Dec. 22 but we’re not clear how long it will take to do the last push up to 2330. Could be as late as Jan. 7.
MONTHLY CHART PATTERNS: 2420 or 2520 isn’t out of the question before this bull market ends and it takes a long time to turn an ocean liner around in so V-tops and crashes are not to be looked for and publications that steer you that direction are being too sensational.