FOR THURSDAY: (7/27) The trade didn’t like the FOMC news on the balance sheet and the dollar is sharply lower from it and T-notes rallies strong and stocks still have a ways to go to the upside and metals have like the news. Stocks are often up overnight after FOMC and sometimes brief profit-taking comes in. NQ 100 near 6000 will invite some round-number profit-taking easily.
SEPT. E-MINI S & P 500
SWING TRADING RECOMMENDATION: Hold Sept. S & P e-mini longs from 2476.75 with a 2470.50 stop. Take partials at 2484 and more off at 2492.50.
S&P ANALYSIS FOR THURSDAY: Bought 1 contract Wednesday night. Wednesday was the quietest FOMC day I’ve seen in 20 years and in the end the market held 2472.50 but couldn’t even take out 2482 or 2485. Usually you can buy the night of FOMC and take quick profits in the morning. The market is top-heavy but should squeeze out more until NQ reaches 5994.
Watch NQ patterns, which project 5994, and when that gets done, then we know we have a temporary pause.
OVERALL: In any case, the market is probably going to take out 2480 eventually and reach up to 2493 and 2520 into the 2nd week of August.
NEAR TERM: Extended target up to 2520-42 into the week of August 7-11. Daily chart pattern projecting 2542 now beyond our yearly target of 2520. Big picture may see the market holding up into the week of August 7-11.
BREAKDOWN POINT: Market will need to take out 2440 to issue a stronger sell signal. Doing some more work on longer-term patterns. At least 2493 or 2525 will come in by August high but pullbacks into October will probably hold 2325 so crash scenarios are just not there but a 10% correction into the fall will seem like a lot for a market that has only 1 elevator up button.
WEEKLY CHART: We are not thinking that the market will fall apart dramatically in July, but we doubt that there’s enough time and room for 2520 to come in this summer before things get complicated August-October. The market does seem like it will hold up into July 25. Seeing lots of congestive action and it may not fall apart until after August 9-11.
CYCLES OVERVIEW: Generally higher into Thursday/Friday.