Friday’s closing bar ruptured the ‘D’ support shown, suggesting the December contract will grope its way lower in search of a temporary bottom. The week was hard on bulls and bears alike, but it is the latter who seemed to have gotten the worst of it. This suggests to me that the stock market is building a major top, a point of emphasis here over the last month or so. The actual bull-market high may have occurred two weeks ago when the December contract hit 4549.50, but there are too many bears that I respect who agree for me to be confident it’s going to be that easy. My hunch is that index futures will open with a thud Sunday evening, and I am publishing this tout a couple of hours earlier than usual in order to put that prediction to the test. For a bigger-picture view of a 4503.50 bull-market target that has been very slightly exceeded, check out the chart and commentary accompanying the latest The Morning Line. _______ UPDATE (Sep 20, 1:16 p.m.): The futures have fallen into a gap between major lows recorded, respectively, at 4339.75 (Aug 19) and 4215.00 (7/19) that is too big to extrapolate a high-odds low. When the turn finally comes, we can assess the underlying bullishness/bearishness of it based on its location relative to the two lows. In any event, the impulse-leg idea obtains here: The farther the collapse goes without an upward correction, the more bearish. ______ UPDATE (10:36 p.m.): The bounce came from roughly midway between two lows, the second of which was a compelling one-off. This suggests it is doomed, but that we shouldn’t try to intercept it too aggressively. Let’s see what the first bear rally in more than 12 years looks like before trying anything fancy. _____ UPDATE (Sep 23, 9:55 p.m.): With today’s powerful thrust, the first bear rally in 12 years is doing what we might expect it to do: make bears AND bulls think new highs are coming. Maybe, but what happens after that will be more interesting than what is happening now.
ESZ21 – December E-Mini S&P (Last:4439.00)