Happy Pseudo-Holiday

Once again Europe is down in sympathy with S&P futures cratering on the impasse in Washington. It appears the move down is not over. 1673 was the bottom of the overnight session of 10/10. I would look to be a buyer there.

This spot should correlate with 1675 on the cash S&P. 1670 seems game too. This is why I was cautious last Friday, yet I should have known that the market would continue to rally into the long weekend and correct in a low-volume session of a pseudo-holiday.

All bets are off if 1646.47 breaks. It could be a larger corrective pattern as yet unidentified, but I would highly doubt it would be the start of a prolonged down trend. I can't find an impulsive way to count the down move off the 1729.86 high of September, so I'm still expecting a new high.

There are such things in Elliott wave theory as truncations whereby fifth (final) waves fail to crest the previous third-wave highs. I don't think that's in the cards here yet.

A close below the 1668 area, however, would be an ominous sign.

Externally, there is tremendous political pressure on both sides of Washington to reach a deal. It still feels to me as though it will be a buy the rumor, sell the news event.