FOR MONDAY: (12/5) Given our experience with Trump and Brexit, how much and how long will markets be impacted by a “No Vote” by Italy and can we be surprised by anything else. I suspect that by the morning session, whatever damage has happened will be negated. If we can, we will put out a report on Sunday afternoon or night. In the end we can only trade patterns and cycles, and patterns suggest that stocks have to eventually go lower this month even if we get a freak bounce first. T-notes are due for a 4th-wave bounce to 125.22 basis March and the dollar should hold 102.22 basis March futures. While these moves look exciting, you have to buy just right and have big pockets. In the end, no one wins in the meat grinder unless you stay up all night and watch and monitor and use trailing stops.
DEC. E-MINI S & P 500
S&P ANALYSIS: Three waves up project 2200 and much above even 2198 would not be great. Support is key at 2183.50 and 2171. Daily stochastics have rolled over and project 2155 over the next week. Guessing that if 2200 comes in the next push will go to 2170. Hard to think another 100 point range will happen and even the “no” vote will take time to manifest a new government that will want to leave the motherland.
OVERALL: It wouldn’t take much to create a 3rd-wave acceleration to 2232 and 2250 but we are more likely to see a pullback to 2155 into mid-Dec., which is seasonally lower and then a secondary high into Christmas. After Christmas, the market looks rather vulnerable. We’re starting to wonder if January will be vulnerable even if we see higher prices into June.
BIG PICTURE: The market is acting like it’s in a 3-of-3 expansion wave and the current projection is up to 2292 on cash and maybe 2342 on cash by 2nd quarter and maybe 2392 as an extreme target for 2017.
CYCLES OVERVIEW: Volatile Sunday; bottoming early Monday; recovering Tuesday.