FOR FRIDAY: (12/16) One would think that the markets may rest after this week’s excitement. We’re open to the dollar still being up a bit more and that might push gold down a bit. Stocks are dealing with quadruple witch and t-notes would look better with one more new low. Markets may be wondering if there will be any Electoral College fireworks.
MARCH E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S&P ANALYSIS FOR FRIDAY (12/16) Quadruple witch on Friday is often a sluggish day. The failure to fall on Thursday lessens the chances on Friday and that might only leave Sunday if some major political even happens. Market recovered 78% of the recent range, which often means a 4th-wave congestion triangle so at best a secondary and higher low above 2043 toward 2050-2 may all we get. Smaller chance now for seeing 2036-38 for a better buy. Taking out 2070 would start projecting 2080. Not willing to chase this market but it’s not letting us in easily and then we have to be prepared for Electoral College fireworks on Monday—or is it another media fizzle?
OVERALL: Patterns suggest a pullback to 2236 and then two new highs to 2300 and 2330 before we really have to worry about a 100-point pullback which may happen into the spring.
Our original work had suggested complications around the election in its aftermath and while the recounts have been a non-event, will the CIA attempts at a soft-coup have more problematic. Unless there is something really wild coming, our focus for swing trades will be to buy a pullback to the 2236-37 region which may take a few days to come in. If the market breaks out to new highs then we will not get a chance.
WEEKLY CHART: Five waves up from the 2179 Italian vote is complete and a 34-point pullback would have to hold 2130 on March futures. That still would require a new high by Dec. 22 toward 2296 with additional resistance at 2330. It would seem that 5-wave up from the election low would be complete at 2330 and set up larger fall. Eventually we might get a 110-point correction from 2330 to 2220 and could take a few months which we need to confirm in the cycles. That means that much of the fun of the current rally will be over soon. Daily cash charts starting to project 2300 and weekly charts 2335. We have a bias for higher prices from FOMC into Dec. 22 but we’re not clear how long it will take to do the last push up to 2330. Could be as late as Jan. 7.
MONTHLY CHART PATTERNS: 2420 or 2520 isn’t out of the question before this bull market ends and it takes a long time to turn an ocean liner around in so V-tops and crashes are not to be looked for and publications that steer you that direction are being too sensational.