Testing Resistance Monday

7:30 am

While the SPX and NDX appear weaker, SPX has  not declined beneath Short-term support to establish a bearish pattern.  The DJIA has been riding the up-sloping Short-term support while the upper probes have been declining to form a possible Triangle formation, which may be short-term bullish.

One of two possibilities exist.  The first is a breakdown, not just Short-term support/resistance at 33880.00, but also mid-Cycle support at 33419.66, which may establish the bear market.  The second is a probe higher to a new all-time high.  The minimum target is 34300.00.  The upper end of that range is near 35000.00.

US 30 futures have risen to a morning high of 33997.00, short of the Friday high of 34087.21.   The bullish probe higher may be established above that level.

ZeroHedge observes, ““We believe we are at the early stage of the biggest Cobra Effect in the history of economics. As the massive monetary and massive fiscal stimuli (over $15T globally) conjoin to save the economy from a deflationary depression, instead they risk hyperinflation – overweight commodities.”

Vaccination parties have broken out on many street corners as explosive human energy has come roaring out of the cage. To us, this is a preview of what is about to transpire around the planet and the “Cobra Effect” has entered the 4th inning. When governments tinker in capital markets there are always unintended consequences. Above all, we must keep in mind – what transpired in Q1 to Q4 2020 was NOT a mere tinkering.

We have just lived through a colossal public-private experiment where fiscal and monetary policy globally have been unleashed at unprecedented proportions. It is easy to sit back and think the 2021-2022 recovery will be much like the 2009-2010 vintage. This is a mistake.’

SPX futures have risen to 4198.62, still not climbing above round number resistance at 4200.00.  The Elliott Wave structure appears complete, potentially leaving the DJIA alone to make new highs.  The Cyclical period of strength ended last Thursday, leaving this week to sort out directionality without any help from the Cycles.  Should a breakdown beneath 4150.00 occur, we may see 2-3 weeks of serious decline.

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