FOR TUESDAY: (12/27) Post-holiday markets are hard to trade because of the release of pent-up energy from lack of trading. Given closed European markets, that may not be an issue this week. The Brits and Canadians take an extra day off for Boxers Day so that keeps volume lighter. The world seemed to survive terrorist threats over the weekend and that may still allow a last-week final bounce. Still may not get much of anything this week but year-end book-squaring.
MARCH E-MINI S & P 500
S&P ANALYSIS FOR TUESDAY: (12/27) Market has still done nothing but continue in a 4th-wave congestion pattern, and that will remain the case unless 2040 comes out. That leaves two more new highs to 2295 and 2330 into early January. We originally had cycles lower for this week but would feel better if the pattern completion came in on a post-holiday spurt. We’re still dealing with end of the year profit-taking this week, as the market has had a 250 point run-up since the election lows. Key support at 2049.50 and 2044.50 with minor resistance at 2069. We do not like the market enough to jump in early and we do see weakness in the afternoon so we will probably continuing range trading and day-trading strategies.
OVERALL: We do see 2295-2300 as the next pattern completion to the upside and if we have a surprise pullback the market would have to take out 2240 to issue a sell signal. Any surprises and a break below 2240 might start leading to 2230 and then 2219.
BIG PICTURE: Patterns suggest two new highs to 2300 and 2330 into early January before we really have to worry about a 100-point pullback that may happen into the spring. Unless there’s something really wild coming, our focus for swing trades will be to buy a pullbacks.
WEEKLY CHART: Market has to hold 2240 and probably the market will not get close to that level. We still would expect new highs toward 2296 with additional resistance at 2330. It would seem that 5-wave up from the election low would be complete at 2330 and set up larger fall. Eventually we might get a 110-point correction from 2330 to 2220 and could take a few months which we need to confirm in the cycles. That means that much of the fun of the current rally will be over soon. Daily cash charts starting to project 2300 and weekly charts 2335. We have a bias for higher prices from FOMC into Dec. 22 but we’re not clear how long it will take to do the last push up to 2330. Could be as late as Jan. 7.
MONTHLY CHART PATTERNS: 2420 or 2520 isn’t out of the question before this bull market ends and it takes a long time to turn an ocean liner around in so V-tops and crashes are not to be looked for and publications that steer you that direction are being too sensational.
CYCLES OVERVIEW: Congestive profit-taking into Jan. 2.
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