FOR TUESDAY: (1/31) Congestive chop in large ranges as we head to the FOMC meeting on Wednesday and then Bank of Japan Fed. S & P should complete a bounce and come off a bit on Tuesday but skeptical of a new low. Everything else looks sideways.
MARCH E-MINI S & P 500
S&P ANALYSIS FOR TUESDAY: (1/31) The Monday before FOMC is often lower and I have often found that stocks will fall 35 points off of their highs, which is exactly what held. The strong bounce late in the day is positive with resistance at 2280 and 2284 overnight. I’m skeptical that 2252 or 2245 will come on Tuesday but even if it does, Wednesday-Friday looks higher. The market fell a bit too much to make a new high to 2304-8 but it’s not out of the question. We’ll focus on day-trading conditions but a 1% pullback isn’t the end of the world even if was the largest fall since the beginning of the New Year.
OVERALL: Our longer-term work continues to point toward a 100-point S & P correction into early April in 3 waves with the first push lower into Feb 28 and then a huge and quick recovery into early March for a B-wave recovery. Still too early to get excited about a major short on the month or the week. Day traders will be advised how to play this one.
THIS WEEK: Would think that a 4th-wave congestion of another 35 points will happen the week of Jan. 30-Feb. 2. Still should get a final push up to a new high. If we get a quick recovery of 78% off of the 36-point range to 2291.50, then the 4th-wave congestion triangle will probably be assured and easy to play.
NEAR TERM: It’s possible that a key high for the winter could be in by Jan. 30 or Feb 6-10 and that highs into the week of Feb. 6-10 are secondary highs. We’re still open to a major pattern completion on cash at 2332 into early Feb. The last pullback 2nd wave on the weekly chart was a congestive fall over 10 weeks. If that is the case again, it could be that we have a 100-point congestive pullback into the week of April 9.
BIG PICTURE: (1/24) Patterns suggest two new highs to 2330 into early February before we really have to worry about a 100-point pullback that may happen into the spring. Feb. 9-March 30 may be the vulnerable period for that to happen but still could see 2380-2400 this year. If anything, any problems with China are likely to create big economic sneezes around the world and spillover problems, and Europe is a mess this year and contagion may cause problems the 2nd half of the year and possibly in February/March. Those of you looking for a larger fall should focus on August-October but will be disappointed until then.
CYCLES OVERVIEW: Congesting Tuesday; higher Wednesday-Friday.
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