FOR FRIDAY: (12/15) Last-minute wrinkles in the tax plan’s “done deal” sent stocks lower but a rate hike by China wasn’t helpful either. Market should rebound on Friday but looks vulnerable Monday/Tuesday so the reversal signal on stocks that came in on Thursday may be for real. There’s always a secondary high so no rush to get short.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.S & P ANALYSIS FOR FRIDAY: (12/15) Our day-traders got some decent sales off and we had suggested that if the market failed at 2668 on a second time, it would be in trouble. (Note we said on our day trade hotline: “Market showing definite signs of fatigue with the lack of short covering off of the 2669 zone. Mid range sales can be asking for trouble but 2671/2672 resistance now will be pivotal for the diehard sellers.”)Daily stochastics turned lower but need to see 2640 come out on a closing basis and secondary highs are likely. Still, we’re surprised that 2660 came out and market projects 2649 with a recovery bounce to 2660. Five waves down projects 2620 but that pattern may not manifest. Some weakness into Monday/Tuesday could allow the lower target if rallies stall under 2660 and are weak. NQ was stronger and stayed above 6400 so verdict isn’t totally in, and we’ve seen these one-day wonders come back for new highs. Taking out 2640 would be a much more convincing top.
Overall: We looked closely at patterns and cycles and we are still expecting 2 more highs to 2689 and 2705 before a dip to 2595-2600. We could congest between 2600-2700 for a few months before a push up to 2905. Next cycle high is June 2018.
BIG PICTURE: The larger pattern on the S & P are becoming clearer with probably a 4th wave congestion coming between 2600-2700 and then a move up to 2920. Next weekly chart cycle high is June 2018.
OVERALL: Not sure we should think correction until 2700-5 comes in and then it might not mean much. It could be 100 points. We’re running cycles for January and February and will report soon.
CYCLES OVERVIEW: Higher into Dec. 15; lower into Dec. 19; higher into Dec. 20-22.
