March 2009

The futures were in the throes of a minor shakeout Sunday night, headed toward a Hidden Pivot at 800.50 that can be bottom-fished with a stop-loss at 798.75. The trade can be done straightforwardly if the target is hit before Monday’s opening bell, but it may require some speed and agility if our number arrives amidst the expected rowdiness of the first hour.  Looking at a bigger picture, the rally target at 848.25 mentioned in today’s commentary (and earlier) will remain valid as long as  787.00 is not exceeded to the downside. Please note that the 800.50 target is not chopped liver, and its easy breach would be telegraphing more weakness.)  _______ UPDATE:  The mini-contract got almost no bounce whatsoever from 800.50, stopping the position out for a loss of about $100. The downtrend subsequently created a weak impulse leg on the hourly chart by exceeding last week’s 787.00 low on the second attempt. If the Administration’s allegedly “tough” stand on an auto bailout is the cause of this selling, as has been inferred, then the weakness must be bought, since there is no way Obama is going to let the industry die.

The Dow seemed inexorably and imminently bound for at least 8059.88 when the bell ended yesterday’s spree, although it will always be a coin-toss predicting how anything will open the next day — especially when the next day is a Friday, and especially when that Friday caps a week when arrant stupidity and hubris were at their very boldest in the political, public and financial realms.   A higher target at 8143.59 (or if any higher, 8155.14) is analagous to the one at 848.25 proffered at exactly for the E-Mini  S&P. These last two targets can be shorted aggressively with stops a bit wider than we generally use, since topping action at or near them looks very likely. _______ UPDATE (10:43 a.m.):  The Indoos broke lower to begin the day, but not very persuasively, since they managed only a faintly bearish impulse leg on the 15-minute chart.  It could conceivably open up an opportunity to buy at the c-d correction midpoint later this morning, although point ‘c’ has yet to form.  Here are the coordinates thus far: A=7931 (Thursday’s high); B=7772 (This morning’s low, rounded); and C=(so far) 7818 (also rounded).

The futures continued their waft toward 848.25, a Hidden Pivot that looks like a high-confidence target, although not quite a hula number. Around 1:30 a.m. Thursday night, the rally was an a modest retracement, creating minor abc patterns that do not seem well suited for bottom-fishing.  However, if someone put a gun to my head and said, “Make a profitable trade, or else!” I’d probably attempt it at 820.00.  That is the ‘d’ target of a very delicate pattern on the five-minute chart. Here are the price points:  a=829.00 (9:20 p.m. EDT); b=823.75; c=825.25. _______ UPDATE:  The futures took a 4-point bounce off 819.00 on their way lower, so the recommended trade was not a clear winner. Weakness persisted on the opening after reality evidently dawned on investors in the form of glum consumer spending figures. The numbers threw cold water on the uber-crackpot notion that shoppers were somehow going lead the economy out of the woods.  There were no useful downside targets an hour into the session, nor was there even a bearish impulse leg on the 30-mnute chart. This suggests that bears were vulnerable to a trap unless the tempo of the selling picks up (which it well could). 

Someone in the chat room mentioned the 1007.70 high recorded in mid-February as the potential starting point of an ABCD downpattern yielding a target all the way down at 842.80. That’s technically correct, but if you look at the pattern itself on the daily chart, it’s the sorriest excuse for a downtrend that we could imagine.  For starters, the A-B leg had to back up twice, attempting running starts,  merely to push past two external lows on its way to 882.70 (the ‘B’ low of the pattern).  Then, spent from this bullying attack on support, sellers failed » Read the full article

Some wag in the chat room mentioned my $22 target in crude the other day, and I’d have to concede at this point that the futures are taking a devious route getting there. In any event, the 57.78 rally target broached here a while back remains valid as a minimum upside projection for the near term, and you could short that Hidden Pivot with a tight stop-loss.  In this vehicle, targets that come from “nice” patterns on the hourly chart usually require about a 20-cent margin of error.