FOR FRIDAY: (3/24) No Health Care vote until at least Monday will at least save our weekend and anxiety levels but stocks may complete downward patterns anyway and the latest version of the bill has gotten worse and taken out some of the bill’s good previsions. The existential dilemma is that these events create horrible congestion and then an untradeable release of energy when something happens. Knowing Washington and the cycles into Monday/Tuesday, hard to imagine a positive outcome and a positive release of upward energy for stocks. This is not a huge event really but somehow it feels like another Brexit does the media just have us hooked with their stories.
JUNE E-MINI S & P 500
S&P ANALYSIS FOR FRIDAY: (3/24) Market not likely to take out 2350-1 and more likely to hit 2328 or 2320 by Monday but if you take a position overnight or on Friday, you may have to deal with sickly congestion in a wait-and-see game. We might as well wait until the morning and if we can sell closer to 2350, it may be worth a day or swing trade that can be held over the weekend with messy cycles.
NEAR TERM: Market got within a hair of our upper target of 2357-8 and the failure to go through does leave the market open to the lower target of 2328 or max. 2318-20 if it seems that Health Care passage is delayed in a big way. Cycles favor the push lower to 2328-30 and then a recovery to 2372-75 part of next week but it’s unclear how one can get a handle on trading in case there are any surprise developments overnight. We feel like it’s safer to err on the short side going into tonight and taking profits at the target but not seeing a chance for a wild recovery until mid-Monday or Tuesday. We bought SDS for a 2x short ETF to cover the short side, as the cycle lows into early April suggest a breakdown.
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: Lower March 24 into March 26-27.