FOR TUESDAY: (10/17) The news that Jack Taylor might be the next Fed chairman upset the dollar, bond and gold markets near the close took away some of our profits. We have a bias toward higher dollars now until Wednesday and lower metals in general and except for another Communist Celebration day for North Korea on Thursday, we might not have any worries. Still, cycles are dicey until Nov. 3 and the chances of world tensions rising has to be kept in the back of one’s mind.

DEC. E-MINI S & P 500
SWING TRADING RECOMMENDATION: Sell Dec S & P eminis at 2557.75 with a 2569.50 stop.

S & P ANALYSIS FOR TUESDAY: (10/17) Running out of time for this market to go higher so we had better get something on. Upper channel resistance is at 2560 with major resistance at 2562 and computer models project 2567. Some of the larger cycles suggest a pullback into Thursday but we continue to think maybe only 20 points or 30 points at best. The telescoping nature of the patterns might suggest 2-3 more new highs to get the market up to 2580-2600. While cycles are very dicey the next few weeks, without a major international crisis with Iran or Korea to rattle the markets, I suspect the trade will continue to do what it does. NQ hit key 6122 within a tick but computer models now suggest 6145 there. We’re raising our entries based on computer models, and top-picking has to be done carefully.

OVERALL: Market looks like it is doing a distribution top but needs to take out 2538 to have a minor breakdown. It’s not confirmed on NQ. We found a new cycle low into Wednesday so Monday may have been the last day for this market to go up. Tight ranges continue to point toward this market tiring and it might not make the upper numbers for an ideal sale.

The most bullish pattern would allow at 20-point congestion triangle to happen between 2540-2560 and then new highs. A 30-point break is also very possible but waiting for much more may be too much. Watch NQ 6145 for a pattern completion and there is money to be made on the upside there for the brave.

LONGER-TERM: While we should get a 20- or 30-point pullback, the chance for something bigger may not come until 2580-2600 comes in. Cycles are intense in the world but the market continues to ignore them. At best if we are to get a pullback to 2320, it may come from 2600 and it may take more time to manifest with December being vulnerable with the budget deficit.

CYCLES OVERVIEW: Lower into Wednesday.

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