FOR MONDAY: (5/22) We are always nervous about putting out orders over the weekend break given the political circus going on but it does look like stocks are a buy on Sunday if nothing happens.
JUNE E-MINI S & P 500
S&P ANALYSIS FOR MONDAY: (5/22) Support at 2376.50 and 2374. Market did fail at the 78% retracement area of 2388. Next push up projects 2400. Much under 2370 and the market may be doing a congestion triangle. The more bearish pattern would to be that if we do get the 78% retracement, it would set up a huge congestion triangle pattern between 2350-2380. Bears who missed Wednesday’s fall have to remember that funds and cheap money will come to the rescue—because that’s what they do. We feel that chills and spills may be happening from mid-June into October but we usually get complicated topping energy in late May and early June. We did get technical sell signals on Wednesday but that doesn’t mean the market has to go straight down right away again.
Cycles for Monday look particularly friendly so unless NYT or WaPost come up with new scandals, the trade will go back to buying the dips In fact, we looked at cycles for next week closely and probably only next Friday into Memorial Day does the market start looking really vulnerable again so we should look at this as a sucker punch. We had thought about early June as a secondary high. We’re not quite ready to go for new highs but there are some patterns that can be read that way and nothing about this market will surprise us. So I think we have to forget about Wednesday and see what develops on recoveries into next week.
As for the rest of the day, if the market cannot fall much below 2375, then I suspect the market is going to recover higher. Complicated political crosscurrents are going to increase volatility.
There a patterns that would allow 2400 and then a push to 2340 and they are not out of the question.
LONGER TERM: (4/26) 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: Higher Monday; generally lower into May 24.
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