E-Mini Dow

I'm including this trading vehicle in today's list because its immediate downside target at 17310 is better defined than the E-Mini S&P's target. This is mainly because the A-B impulse leg meets all of our 'beauty contest' criteria. A tradable implication, presumably for night owls, is that a rally back to the 17617 midpoint pivot could be shorted mechanically with a 17719 stop-loss. Camouflage would be the preferred entry tactic in any case, but you shouldn't attempt the mechanical trade unless you perfectly understand its risks, which are considerable. Notice as well that I've used a one-off 'A' to project the target, but sliding up to the visually obvious 'A' would imply a tradable bottom at 17262 (and p=17593 -- 4 points from the so-far high of the snapback rally). _______ UPDATE (9:35 a.m.): The bounced I'd characterized -- perhaps prematurely -- as a hoax has in fact tripped a sell signal at 17639, but that is in the context of a lesser rally pattern that tripped a 'buy' at 17678 (30-min, a=17540 on 3/31 at 11:15 p.m.). On balance, I'll use the latter pattern for now. But it implies the futures need to push past p=17725 to show some guts. Thereafter, D= 17819 would be in play.

The futures came close to the 17057 rally target yesterday, but their failure to actually reach it suggests that weakness is creeping in.  If so, we should see the small abc pattern currently in progress exceed its p midpoint pivot and continue to or past D.  Ordinarily, either of these Hidden Pivot supports would be worth bottom-fishing, and you can certainly try it if the action is mellow enough to bid both with a stop-loss as tight as three ticks.  Regardless of whether you trade this one, however, an easy breach of p and D would be telegraphing more downside over the near term. ______ UPDATE (3:35 p.m. EDT): The pattern shown in the chart would have been useful for purposes of bottom-fishing if weakness had begun the day. Since the futures gapped higher, a bottom-fishing strategy was negated. The very clear, bullish implication is that a bigger, uptrending pattern is in play. The most logical and compelling one began on 5/20 from A=16255 (as did a big, bullish pattern with a 173.52 target that I'd drum-rolled earlier in DIA). The YMU target that corresponds to that lies at exactly 17253.  This implies there is a bull play from here with nearly 200 point of upside potential, along with a 17253 target that can be shorted AGGRESSIVELY and with high confidence when the time comes.

Stocks were struggling to get airborne late Sunday night after dive-bombing the tarmac Friday on news that the U.S economy had created a measly 120,000 jobs last month. Index futures traded just briefly on Good Friday before electronic markets closed at 9:15 a.m. for the holiday, but that was long enough for DaBoyz to take stocks down to fire-sale levels on near-zero volume. The E-Mini Dow futures plummeted 120 points in less than two minutes, setting the glum tone when trading resumed Sunday evening. However, our hunch is that shares will not go much lower on the opening, since the dirtballs who work the night shift are so good at shaking down the rubes on ostensibly bad news.  We say “ostensibly” because, for every trader who was disappointed that the alleged economic recovery appears to be losing steam, there were undoubtedly others who saw a new excuse for yet more Fed easing. A cynical calculation, to be sure, since everyone understands by now that even though the central banks have been running wide open for years, it is not benefiting employment, only stocks. Not that Wall Street cares.  Who needs jobs when it’s possible to promote runaway asset inflation with less effort and at a fraction of the cost?  Granted, that’s not the way Mr. Obama and his supporters on Capitol Hill would prefer it, since higher share prices alone are unlikely to fool voters come November. But for the time being, a rampaging stock market still holds the promise of reviving job creation and perhaps even of causing home prices to start recovering. We see neither happening, implying that the stock market could be on shaky ground. For even as Q1 earnings estimates have come down, down, down, the broad averages have barely paused for breath since late November.

The U.S. stock market's strong upward bias at this moment is the sickest, stupidest, most recklessly suicidal behavior I have witnessed in nearly 40 years of trading.   Odds of a nuclear catastrophe are mounting by the hour, and if that weren't worrisome enough, the world has backed Libya's paranoid dictator into a corner.  And yet, here is the E-Mini Dow trading as much as 110 points higher late Thursday night. Any speculator who goes home long stocks or short oil on Friday is going to get his head handed to him on Monday.  Rick's Picks subscribers should look to fade this evening's hubris on Friday in any way possible -- and damn-the-torpedoes.

My 11877 downside target missed Friday's low by 14 points, so we did nothing officially.  The fact that the subsequent rally went on to create a bullish impulse leg of hourly chart degree is a modest positive ahead of Monday's opening. This is notwithstanding the fact that the initial move Sunday night has been down.

There are two targets below, and shorts who catch a ride should be alert for a bounce from either (or perhaps both:  11921 or 11877. The lower number maxes out the hourly chart, suggesting that scalpers would enjoy favorable odds attempting to bottom-fish there with a stop-loss as tight as 6-7 ticks.  Keep in mind, though, they you will be getting in front of a downtrend that could only just beginning to show its power.

It's a struggle to believe that this tedious, two-week hacking-cough-of-a-consolidation is going to produce anything resembling the moon shot we might expect after so lengthy a pause.  Assuming the futures go lower in the first place, my minimum expectation would be 11921, the 'D' target on the pattern shown. It can be bottom-fished with a stop-loss as tight as four ticks.  ______ UPDATE (2:11 a.m. EST): The futures have slithered up to a so-far high at 12141, but if they hit 12156, short there with a three-tick stop-loss -- better yet, short 12155, a tick below the Hidden Pivot, with a four-tick stop-loss.  Best bet: Start looking for a camouflaged downturn when 12151 is reached.  ______ UPDATE (9:15 a.m. EST):  The futures topped overnight at 12148 -- seven ticks from our offer -- before plummeting back to 12062, so officially we did nothing.

A 12412 target identified here a while back remains viable, so let's plan on shorting there with a stop-loss at 12421.  As is the case with the E-Mini S&Ps, my preference is to initiate the trade using camouflage.  I don't usually advise getting involved on a Friday afternoon, but in this case, because a short-squeezy high on a Friday close would bamboozle even those who have been eager to get short for...years, scaring them from dong the right thing, I'll make an exception. _______ UPDATE (Sunday, 8:28 p.m. EST):  The futures went the wrong way, but the target and the suggested trade remain viable.  Night owls can look for bottom-fishing opportunities at 12109 and/or 12041.

The bearish pattern begun from last Friday's peak projects to at least 11921, a Hidden Pivot that you can bottom-fish with an 11923 bid and a five-tick stop-loss.  I've used a distinctive one-off point 'A' to calculate this target (shown in the accompanying chart). If the support is easily breached, that would shorten the odds that we are seeing more than a garden variety pullback. _______ UPDATE (4:52 p.m.):  Today's flaccid rally did nothing to alter either the outlook or our plan. Look for more downside to 11921 over the near term.