FOR THURSDAY: (2/9) Stocks still look higher for a few days for a divergent cycle high and there’s no reason to top-pick. The dollar also looks higher although not thrilled with the late break today. There’s a cluster of cycles over the weekend that might finally create a temporary cycle high for stocks and the dollar and T-notes and start them lower into Feb. 28, and we’re focusing on doing that play starting Sunday.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR THURSDAY: (2/9) Topping congestion continues but until 2280 comes out, we are still in congestive range trading. New highs on NQ futures again to 5197 continue to create divergences. Positions traders have to patiently wait for Sunday/Monday in case the S & P finally comes through. Cycles do support new highs into Friday even if the S & P lags behind.
Computer models point to 2301.50 but taking out 2280 wouldn’t look good. Our sense is congestive topping action this week that will drive you crazy but in the end will push up to slight new highs. NQ could accelerate to 5250-68.
OVERALL: First pattern completion within a few days to 2310 and then a pullback and then an extended target is up to 2317-8 into early next week or as late as Feb. 11. We’ve learned not to be a martyr about top-picking and while we’re getting close to a key weekly chart high, it’s not quite in yet. Still, 2310 will be hard to take out right away and we won’t rule out 2332 on cash to have an absolute completion.
WEEKLY CHART: Overall, we continue to look for topping action and a 100-point S & P correction over the next few months. Market a bit too oversold to jump into sales without a recovery. Given the atmosphere out there, we wonder if it will be more. Open to a major short into Feb. 26-28 but have to pick your spots carefully.
NEAR TERM: It’s possible that a key high for the winter could be in by Feb 6-10 and that highs into the week of Feb. 6-10 are secondary highs. We’re still open to a major pattern completion on cash at 2332 into early Feb but it’s probably down to 30% chance to happen and 2309 would be welcome. The last pullback 2nd wave on the weekly chart was a congestive fall over 10 weeks. If that is the case again, it could be that we have a 100-point congestive pullback into the week of April 9.
CYCLES OVERVIEW: Higher into Friday.