The week ended on a felicitous note, since we'd shorted some S&P mini-futures Friday on the exact high of the day, 1398.25. The advice that went out to subscribers the night before, with the S&Ps trading 26 points lower, was as follows: 'If there's a reason to go with the flow right now -- to follow the lunatics right to the edge of the cliff, if need be -- it is the clarity and persuasiveness of the bullish pattern shown in the accompanying chart. The hourly bars yield some of the most reliable targets we've seen in this vehicle, and it looks like another doozey is on its way. The actual pivot lies at 1398.25.' And so it went. The position was showing an unrealized gain of $550 per contract at the final bell, but we've learned not to count those chickens before they hatch, since what Mr. Market giveth, Mr. Market might rescind before we've had our first cup of coffee Monday morning. Even though we were prepared for the S&P futures to top exactly where they did, Friday's tidal surge came as surprise, triggered as it was by the announcement that Citi had lost yet another $5 billion in the first quarter. Had we known that such rotten news would greet investors on Friday, we probably would have gone home short the night before. But we would have been dead wrong, and we would have been sporting a brand new orifice before the session was even an hour old. Who knew? For, far from being alarmed by the news, Wall Street took it as reason for celebration. (Click on chart to enlarge) We've explained here a dozen times that these rallies have just one cause: short covering. Seen in that light, Friday's surge occurred simply because sellers, having
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