James´ Insight

Today´s Outlook

• Bullish %: not important right now
• Current reading is 595, poised for a breakout move

Today is poised for a breakout move despite low volumes into Labor Day.

Weekly Outlook

Price reversed right at 1040 and should now head upwards. 1052 has been tested and held. The market is oversold and is due for a technical bounce to 1066, 1075, 1089 and even 1106. The reversal pattern remains alive and well and actually projects to the 1214 area. It will be a bumpy ride, should that be reality.

The world should see one more rally before price simply drops to the lows in 2011 and there it should bottom. Health care costs and taxes will cripple the business environment next year.

The week ahead is a preholiday week and is normally bullish going into Labor day next week.

Analysis

There is not much chance of any volume today before the holiday. The volume has always returned after Labor Day, so be ready for next week as traders begin to come back.

This year of course we have the financial regulation effects of seeing the banks close their prop desks. We will just have to wait and see what effect this has on the market’s liquidity. So far the market is obeying the rules it has always obeyed.

Again, 1085 is the big number to watch as it’s the pivot for two patterns; one bullish and one bearish. I suspect 1085 breaks to the upside with a pullback to 1085 next week.

Even in the worst macro economics, if the boys want it up for bonus then that is where it’s going. They’ll worry about sustainability later. But when looking at the economy I actually see vast improvements. GDP went from -6 to -2 and is holding at -2 even as consumers scale back. There are times the forest cannot be seen for the brush fires in front of it. Bernanke has told the markets that he is not going to allow any back sliding. He hasn’t been wrong yet if anyone has listened.

The last part of the equation is participation or volume. After Labor Day that is what we should see. If we do not see participation then financial regulation and the closing of prop desks will have truly affected the markets. That would take the markets back to pre 1998 activity.

The Vix would drop dramatically. With world events being what they are I sincerely doubt that we reenter that market. So relax a bit and be ready for next week.

The next four months are “money months” be ready.

There will be no Monday edition due to the holiday.

Good luck with your trading!