This week led up to anticipation of the healthcare bill – which was initially supposed to happen on Thursday, but since the GOP folks didn’t get enough votes, they postponed it to Friday.
By end of day Friday, they still weren’t able to get enough votes.
Paul Ryan made a trip to Trump to tell him that they didn’t have enough votes. In this short period of time on Friday afternoon, the market sold off -barely making a new low, but at around 3:40pm, news was they wouldn’t vote after all – and the market bounced back into the close.
It appears they are going to just move onto the next issue – tax reform – without voting on the healthcare bill.
If there is a vote on Monday, then I would expect the futures to make one more low before a bounce. Otherwise, because we made a new low, there’s technically enough waves to consider this low a local low.
However, that does not mean the next rally will make a new high. This Trump failure puts into question his ability to get things done as promised – and could potentially put the Trump rally in jeopardy. I’m expecting the markets to grind here for a B-wave – and perhaps the next big news event if there is one in the next month or so – will lead to a sharp and quick C-wave towards 2320ES. But until then, the market may be stuck for short moves in both directions.
On Friday, implied volatility specifically for options expiring on Friday March 24 – were through the roof – implying a market crash. I think these levels are overblown and this likely elevated level of VXX could offer a potential entry on the short side.
In terms of what’s next, – assuming no vote on Monday, we should stay range bound in the 234-2350 region. If there is a rally, it should have trouble in the 2370 region and potential turn down if it stays in that region too long.
The Russell was the weakest of all indices especially on that drop from 1390 to 1330 in a 24 hour period – that’s a 60 point Russell drop – something we have not seen in the Russell in – I think – years.
Resistance was right up in the 1362 region and support in the 1347/1348 region – where we initially bought.
The healthcare bill news brought the Russell right into that region. Any retest into the 1340-1347 TF region would be a buy.
The Nasdaq has been unusually strong year-to-date but the big one day drop on March 21 – changed the momentum. The 5400-5420 region should serve as strong resistance for the Nasdaq
After the healthcare vote failure news – gold immediately dropped almost $9 in the last hour or so of trading on Friday. Still, there should be support in the 1238-9 region.
Silver is much stronger than gold. Previously, gold was outperforming silver over the last few week, and silver was underperforming. It appears in the next leg up, silver should lead.
Last time’s prediction of a triangle didn’t play out – as the drop towards 2360 initially completed 5 waves coming short – it turns out that 5 waves was wave I — followed by a wave II overnight, and wave III of larger C wave down that broke to new lows.
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