Good Morning:

• Happy Lunar New Year! We managed to get through monthly options expiration on Friday, and the market now has a chance to reset its direction for the Fed meeting in early February.
• The market got a positive lift from short-covering by the DTE crowd going into the expiration. And it triggered another swing buy signal for the Navigator Swing Strategy at 3939.25.
• Lately, we have been renting the index for a while, comfortably exiting when the swing indicators tell us to hit the bench. But is it time to “own” the index because a major low has been achieved? Unfortunately, caution is still warranted. We have talked about the pattern before. It starts with the next Fed meeting (and rate announcement) in early February.
• Over the past three meetings, the Fed teased the investment community a few weeks ahead with mixed rhetoric about a pivot. A rally ensued, and the Fed took advantage of the upswing to aggressively raise rates again. The market heads lower on the disappointment. Will they do it again?
• And therein lies the rub. The market wants to go up, and of that, I have little doubt. The 60-year master cycle (green dotted line) could give us a few more days, as suggested above – though it should be close to peaking. The Foldback (blue line) also means higher prices for a few days. A Foldback is where prices emulate the progression of the recent decline in a mirror image advance on the right side of the chart.
• After the Blue and Green dotted lines peak, we get the markdown into February/March, where a cluster of cycles – Hurst and Gann – are slated to the bottom.
• The question would be, how low can it go in the anticipated decline? Absent a catalyst, I don’t see it going past the October low. In fact, from recent behavior, I don’t see it even going that far. Current behavior across multiple asset classes has been bullish.
• Note the bullish behavior of Dr. Copper.