FOR FRIDAY: (8/25) Jackson Hole doesn’t begin until tonight and Drahgi and Yellen aren’t speaking until Friday so the market is still on hold unless they are positioning big before those speeches. Not sure how big a deal Hurricane Harvey is but crude was not worried on Thursday. We have a bias toward lower dollars and higher gold and higher stocks on Friday but we’ve seen so many Yellen and Draghi surprises, it’s difficult to be overextended.
SEPT. E-MINI S & P 500
TRADING RECOMMENDATION: Wait for morning comments.
S & P ANALYSIS FOR FRIDAY: (8/25) Sickly congestion trying to trigger buy and sell stops but not doing any follow through. NQ fell more than expected but then came back. SP also went more than we liked but came back. That means no an easy trade on Friday. SP never completed 2430 even and NQ broke enough that 5700 could come in on bad news. Much above 2450 for S P and we will not get to see 2430.
Sometimes we get a delay on timing when the trade waits for a big event like Jackson Hole. We’re stuck too high to chase and if we nibble it would be closer to 2430 with a tight stop. If we really want a serious buy, we need to wait for 2405, which is possible if Yellen says the wrong thing. Still, we have a bias for Friday being higher. Swing traders need to wait to make sure the market isn’t breaking 2430 overnight.
Given past history, the bears can make a case that the rally on Tuesday was only 3 waves and it could be a congestive 4th wave. The analogue cycle dominate into next Sunday are supportive and Central Bankers usually know how to deliver what the stocks like. That leaves us looking for a more solid breakdown below 2430 to turn bearish. NQ’s break below 5825 but not a close below there is the only positive for bears.
Cash left a gap at 2430 and but also one above at 2460.
OVERALL: Bullish pattern: If the market doesn’t breakdown and likes news on Thursday, major resistance is up to 2459-60 is resistance now and the more bullish patterns suggest a rally to 2463.25. We had thought that 2477 would be next on this move and computer models now suggest 2485-6. We’re open to 2520 into September. Our original monthly chart research had suggested a low on Aug. 21 and a recovery from there.
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.
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