Amazingly, the deal got done. Predictably, the deal buys us only a few months before we get to do it all over again.
From a market perspective, the crisis is averted (for now.) And, given the .50% hit to GDP, the Fed has even less reason to taper anytime soon.
Our upside forecast updated yesterday should be in pretty good shape going forward — though there will be plenty of bumps in the road. First stop: the smaller IH&S target at ES 1722.50.
The white channel is too steep, so another backtest of the red midline (1704-1705) isn’t out of the question. And, remember, ES did just complete a Bat Pattern at the purple .886. So, a dip to the .707 or .618 is always a possibility.
A failure to reverse in that area opens up 78.913 by early November and 75.45 in the month or two following. While I’ve had the falling white channel seen above as a placeholder for the past month or so, I suspect the top of the falling wedge will probably act as the top of a new falling channel I’ve labelled below in yellow.
Not to worry. It will only affect those who buy electronics, cars, gasoline, clothes or food. On second thought, maybe it’s best not to delay that week in Tuscany or luxury import you’ve had your eye on.
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