We closed out September yesterday with the break I have been predicting in the near historic winning streak on the monthly charts. In fact, September entirely reversed August’s gains leaving a key reversal on the charts. But all my prediction means is that I was finally right just like a broken clock that is right twice a day.
We closed just slightly above a retest of the 9/20 swing low. They took it down another 30 points overnight but brought it back. Were it not for the overnight action, the cash chart simply looks like we will finish testing the low this morning and go from there. Lately though, the daytime crowd has shown no respect for the overnight team. My fear is that the bears are making too much money to quit now. In any case, a rip your face off short-covering rally is due soon and may have already started.
My dilemma is threefold. First, is this truly the bottom of the 80-day cycle? If so, we should move higher from here to establish the top of a trading range. If not, what are we experiencing? Is the 18-month cycle still in our windshield and the markdown just started? Did the 80-week cycle bottom on 9/20 only to peak early giving us left translation in the wave, as further evidence of a late arrival of the 18th-month cycle? Is all of this just political volatility around Congressional infighting and Fed Chairman Powell testimony?
Let’s see if the small gap higher attracts early sellers or not and assume potential for short covering with a first target of the Globex high at 4320, with an ultimate target at yesterday’s halfback at 4333. Monitor for continuation very closely.
If we are to head lower, the opening drive will move lower almost immediately which would tell us that sellers are VERY firmly in control and are not interested in covering at all, which also would be confirmed by a retracement back down through the open which would be a short. Given the sentiment out there, the cross down through yesterday’s RTH low at 4293.75 could also be an entry or level where earlier shorts can add to their position.
Again, monitor for continuation very closely. It goes without saying that the Navigator Algo has not rendered a buy signal yet.
A.F. Thornton