March 2010

Two strong uptrends are at work right now, both of them visible on the hourly chart (see inset). The larger projects to 119^04, the smaller to 119^14, and their respective midpoints lie at 117^21 and 116^26.  The lower midpoint has already given way, implying that we should use the other, 117^21, as a minimum upside target for the near term.  A close above it would hint of more strength to at least 119^04.

Friday's low at 79.69 fell a tad shy pf a 79.42 downside target that comes from the hourly chart. We'll make it our minimum objective for now, but any lower would be warning of a washout down to the February low at 78.68

If weak pivot support at 17.035 fails, the futures are likey to test a stronger one at 16.935 that you could bottom-fish with a three-tick stop-loss. Please note that a close below that number would be a warning of a possible fall over the near term to as low as 16.520. Alternatively, it would take a rally today exceeding 17.185 to turn the very lesser charts (i.e., up to the level of the 5-minute)  positive.

Nothing has altered that 1095.50 downside target,  including the nasty, $18 head-fake that followed Thursday's lows. You can bottom-fish with a 1094.70 stop-loss, but if it's hit, the secondary target at 1092.00 flagged here Friday will be in play.  You could bottom-fish that Hidden Pivot as well with a 1092.20 bid, stop 1090.80. The earlier in the session the second target is hit, the more likely it is to produce a tradable low.  Alternatively, the futures would need to pop today to at least 1113.40 to turn the lowly five-minute chart bullish.

Friday's phony spike should have trapped enough bulls to spark more than the feeble 12-point selloff that we saw.  That the downtrend didn't even reach its 'p' midpoint is a reason for bears not to get their hopes too high about a major top being in. This should pose no problem for those who shorted Friday's high on my advice, since, in an intraday update, I recommended taking partial profits at what turned out to be the intraday low.  Officially, and adjusted for partial gains realized thus far, we are short two contracts with an 1171.00 basis.   Use an 1153.75 stop-loss for one of them until 1144.00 it touched, switching to a five-point trailing stop thereafter. The other contract is to be held for a possible home run and stopped above Friday's high, 1159.50. _______ UPDATE (3:00 p.m. EST):  On a sloppy, turgid, tediously trendless day, the futures have triggered a stop at 1146.25 off an 1141.25 low. Imputing the implied 13-point gain to the remaining single contract that we are still short will raise its cost basis to  1184.00. At current prices, that represents a paper gain of $1900.  ______ FURTHER UPDATE (3:04 p.m. EST):  Since the March contract expires this week, let's roll the position, covering the March conract(s) while shorting the June contract(s) for a debit of up to 4.50 points.

Having faded Friday’s high in the index futures, we’ll be short the S&Ps when the stock market opens Monday morning.  Is The Top in?  It seems unlikely, given that the bear rally is entering its thirteenth month and acting like it’s about to get second wind. Still, it never hurts to keep trying to pick the top, especially when it’s possible to so without risking an arm and a leg. Here’s the trade recommendation exactly as it went out to Rick’s Picks subscribers Thursday night. “Let’s plan on shorting [the E-Mini S&P at] 1159.25 with a two-point stop-loss. I don’t usually favor patterns so very elongated as the one shown in the chart, but the two rally legs are sufficiently similar in appearance to beckon a modest, $100 speculation.  This being a Friday, and Mr Market being, always, a sonofabitch, we might expect the target to be hit in the final 90 seconds of the session.  My advice is to take the trade anyway, provided you are able to monitor it, and to use the stop-loss, when index futures resume trading Sunday evening.” (Incidentally, you can sample Rick’s daily touts free for a week by clicking here.) It was our good fortune to have caught the exact top on Friday with this strategy, although our short entry occurred about an hour before the NYSE opening rather than at the end of the day. The chart above shows where we initiated the short. At that moment, news was crossing the tape that February retail sales had upticked. A negative number had been expected, and so DaBoyz used this mild surprise to do what they’ve been doing so well for the last twelve months – i.e., grabbing shorts by their cahones and squeezing with all their might. This by-now tiresome trick has

The Euro has been tracing out a bowl-shaped formation for more than a month, and it might now be poised to break out strongly to the upside.  Important prior highs are within reach, and the next two of them will be surpassed if the Euro hits a D target of 1.3756 shown in the attached chart.  Above that level is a cluster of prior highs ranging from 1.3789 to 1.3840.  The 1.3756 pivot has high credibility due to a large bounce off of its exact sibling midpoint of 1.3688.  A shallow pullback from the current level, perhaps to the 1.3688 midpoint area, would give rise to a camouflaged buying opportunity, as depicted in the chart.  Traders looking to short the 1.3756 pivot should not enter orders before the prior high of 1.3737 has been surpassed, as this might release a burst of upside energy.  For the same reason, traders with long positions should treat the 1.3756 pivot as a minimum upside objective and use trailing stops so as to remain long in case the market slices through the pivot.  (Posted by Doug McLagan)  _______ UPDATE (10:37 a.m. EST):  The Euro slightly surpassed both of the two priors marked in the chart and then pulled back to one pip below the midpoint pivot.  The ensuing rally indeed sliced through the D target and went as high as 1.3796, a move that was worth as much as $1,362 per contract.  The prior high of 1.3789 was surpassed, giving the Euro chart an increasingly bullish look.

Rally targets for the broad averages, as well as for some key commodities (including crude), imply a broad move higher today to within inches of mid-January's peaks.  The supply up there may not prove to be immovable, but it is bound to test the irresistibility of stocks that have been trending relentlessly higher for the last five weeks.  If Mr. Market is up to his usual tricks, we should see gap-up openings in many vehicles, putting the potential last gasp of the uptrend beyond the easy reach of most traders.

Like so many other trading vehicles, including index futures and ETFs, April Crude has a compelling rally target that lies within an inch of mid-January's highs.  The precise number in this case, a Hidden Pivot at 84.74, would fail by a hair to surpass January's 84.96 high.  (The comparable target for the DJIA and the Diamonds, however, would slightly exceed the January high.)  Clearly, this is a crucial juncture for many of the issues we trade and/or monitor.  And while it is hard to imagine the targets will not be reached, it is by no means a foregone conclusion that they will be decisively exceeded.  All in all, it is probably a good day to lie low and spectate for a change.