I don’t like the way the averages trashed a couple of  hidden pivots supports yesterday, not at all, and I said so in an intraday bulletin. We had bids in below the market in two trading vehicles, the Mini-Russell and the Mini-Dow. The latter fell to 10630 in the first two hours of the session, just a single tick above the 10631 hidden-pivot target I’d identified the night before. But when the futures finally broke below that number several hours later, it was a clear sign that downside momentum was about to accelerate. And it did. In the Mini-Russell, we were looking to bottom-fish a hidden pivot at 670.20. The ER produced a tradable bounce as well, from 670.10, but the bounce was short-lived, lasting just 40 minutes. When the pivot eventually gave way, the futures headed moderately lower, ending the day with a feeble rally to 670.20 exactly. That number should now be viewed as resistance, but I mildly doubt that it will figure into this morning’s opening. More likely is that the major averages will simply head lower, giving vent to sellers who made the mistake of holding long positions overnight.

 (Click on chart to enlarge)

Of course, forecasting the opening is a fool’s game, and stocks could easily rally in the early going if Da Boyz throttle back on supply. But my guess is that there won’t be enough suckers around to lend convincing buoyancy to such a rally. Under the circumstances, I’d suggest that you not take CNBC’s bullish propaganda too seriously if there is ostensibly good news to tout on the opening bell. Unfortunately, we were not able to buy puts in the QQQs, since their high for this cycle fell 0.21 points shy of the 40.12 top we were anticipating. However, we do hold a highly leveraged backspread in Citigroup, a good proxy for the market at this point, and it has the potential to produce quite substantial profits if the stock tanks. Meanwhile, there is relatively little risk in the position, since profit taking has already reduced our cost basis on the puts to about 0.32 apiece.