FOR TUESDAY: (8/22) Trade waiting on Jackson Hole on Thursday and it’s still the dog days of summer. We don’t like cycles on Tuesday and if the stock market doesn’t gallop on Monday night, it may still be a sale. We have a bias toward buying gold on dips and selling dollar rallies the next few days.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR TUESDAY: (8/22) Market hit the abc completion in the 2415 region. We really don’t like cycles on Tuesday for a rally but can’t rule out a spurt overnight that may look promising but may not mean much. Resistance up at 2440 has to come out to entice any buying from us. Lower support at 2405 and 2393 could still happen. We’re open to the market getting spooked today and new threats from North Korea over the weekend with US war games happening aren’t a good backdrop. Still, the trade has tended not to do that much on past Mondays. Watch 2412 coming out early as a sign that the market is wanting to go deeper than the minimal amount. This week could be very volatile but it’s possible that if the current pattern holds, that the market could come off and recover off of 2415. Still, we didn’t like the dollar close and we have gold up 2-3 days now.
Breaking 2405 would lead to 2393 and taking out 2389 could lead to a freefall to 2320. That has been our October target but anything wild can happen.
In looking at the big picture, if 2400-2405 continues to hold , a possible bounce target into September might only be back to 2477 and not to new highs to 2525. Given the world backdrop, that might make more sense. Patterns would at least suggest 128-point drop from the highs to 2360 into October in the most optimistic scenario.
WEEKLY CHART: There’s still a good possibility that based on patterns that the current fall is a 4th wave and that a new high to 2500-2520 would be possible in September but a secondary high to 2477 is more likely. In the end we still max. 2300-2320 as a fall correction target with a multi-year high due into 2018. Market needs to hold 2400 into Monday and shoot out of there to open up that scenario. World violence cycles are strong the next few weeks and it won’t take much to unsettle this tired market.
CYCLES OVERVIEW: Recovering Monday night; lower Tuesday; higher Wednesday; lower Thursday; higher Friday.
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