The chart presents a moderately bearish picture for the near term that is further mitigated by bears' struggle on Friday to hold the futures beneath the midpoint support at 7677.25. They ultimately failed, implying that any additional progress down to d=7516.00 will be challenged by dip-buyers every step of the way. I expect this gasbag to flirt with record highs for the next month or so, buoyed by short-squeeze head-fakes whenever DaBoyz get the chance. At the same time, weakness in the Lunatic Sector will persist, with little likelihood that the egregiously misnamed Magnificent 7 will make new highs. In summary, this describes a 17-year-old bull market ending with a whimper rather than a bang. All that will change when the dip-buyers are confronted with an avalanche that will make the covid sell-off look like tea and crumpets.
DaBoyz spent most of the week screwing the pooch, waiting for more Hormuz twaddle from Trump to help them jack the markets, or for a headline speculating that the Fed might be less inclined to tighten for whatever reason. The latter helped foment a middling, 60-point short-squeeze on Thursday, but by week's end stocks appeared to be settling back into their wonted state of constipation. Not that that will make them any less tradeable: Bottom-fish 7778.50 with a tight stop if you're around when it's hit. (Note: When I say "tight," I mean to imply that you should use a small pattern 'camo' trigger to initiate the trade, and that it risks no more than small change to get you on board.) Concerning the bigger question of whether we are in a bear market, bull market, or a sideways correction, it can be answered much more easily than you might imagine, using the simple chart shown. If the September contract falls to the green line without having exceeded 7838.50 first, that would imply bulls are taking a long overdue rest. Expect the fall to hit p=7676.00 at least but watch out below if they impale it on first contact. An easy breach of d=7613.75 would be the most bearish sign the S&Ps have flashed in a long while. One final note: Consider my Microsoft tout (immediately below) alongside this one, since the stock remains a key bellwether for the long-term bull market.
The short squeeze powering this bull market tacked on another week of mechanical buying, leaving little doubt that the 8263.35 target shown will be achieved. Adding to the evidence is that the futures have remained above p=7307.75, the midpoint Hidden Pivot resistance, since touching it for the first time three months ago. Now they've blasted free of it decisively by exceeding p2=7785.00 on Friday. Your trading bias should be bullish but consider it a gift if this vehicle should pull back to 7657.75 before launching anew, since that 'hidden' support can be bottom-fished with a tight 'camo' trigger. The one-off low is not strictly kosher, but if the uptrend exceeds D=8262.25, you can assume it's bound for 8557.50, the target associated with the marquee low at 4832.00 recorded the second week in April.
Although DaBoyz could easily short-squeeze this gas-bag to new record highs with just a dollop of fake good news, I've presented a chart that is somewhat bearish. The 7266.00 target lies just 3.5% below, and even though the tedious struggle between bulls and bears has yet to achieve it after six weeks, there is no reason to presume it will not be reached eventually. Bottom-fish when the futures get there, but be sure to use a 'camo' trigger, since my merely mentioning the target in print is likely to queer its magic and attract some clowns and Goldman algos. For the record, I have been won over by a strategy used successfully by chat-roomer 'Nick the Greek' that's pretty simple: short this hoax every time it pokes its greasy little snout above the waterline. Nick's stops are wider than I would recommend, but his tactics seem to be working. I have yet to adjust to the shift to a bear market myself and am still bottom-fishing stocks like TSLA out of habit when they are falling like cinder blocks. On Nick's inspiration, though, I hope to come around, and soon. _______ UPDATE (Aug 3, 12:02 p.m.): ES has easily exceeded a minor 'd' resistance at 7598.75, implying it will take shorts to the wire with an assault on June 15's 7648.75 peak. That is also the 'C' high of the bearish pattern projecting down to D=7266 (see above). If the vicious little sonofabitch head-fakes above June 2's record 7693.75, I will do my utmost to nail a shortable top for you. This should be relatively easy, since the clowns, droolers and algos will all be pretty freaked out at those unaccustomed heights
Seven weeks have gone by without a new high, each coaxing more traders into the bear camp. That's why this distribution has been so tedious: getting short has grown more appealing by the day. The result is that the broad averages have become more diabolically evasive, particularly for those trying to get short. And yet, we knew all along that Mr Market would provide no easy opportunities. Friday's whimpering climax looked like one, though -- at least for anyone bold enough to endure waiting for whatever news hits us on Sunday. My hunch is that anyone who got short at or near Friday's 7496.50 high will be in good shape. That implies this vehicle is on its way down to at least 7357, where an important low occurred exactly one month ago; and thence to the 7261.75 target of the pattern shown. There will probably be a strong bounce from there, and although it must be shorted, there is no reason to think this will be easy.
The futures ended the week on a tempting buy signal that was best ignored, since it is impossible to predict on a Friday what fresh hell Sunday's news might bring. The headlines were decidedly bearish in producing Thursday's overnight cascade: crude prices were up nearly 4%, Xi Jinping was boasting of China's supposed answer to Anthropic, and a SpaceX rocket ship failed to get airborne. Stocks did not so much shrug off this news as leverage it to spring a weak bear trap. The short-covering Whoopee Cushion that resulted culminated in the buying temptation noted above. Now, the futures will either leap to the 7573.50 target, or at least to p=7523.25; or more likely in my view, stop out the trade and continue down to late-June's lows near 7350. Stay tuned to the chat room for ringside commentary as events reveal the nature and purpose of Mister Market's deceptions.
The week ended with a ratcheting, brain-dead rally inspired by a relative dearth of "news". The Wall Street Journal led with this grabber: Fears Over New Luxury Jet Forced Trump Back to an Old Air Force One After Israeli Warning. The stock market's excruciatingly modest gains didn't quite reach the 7682.25 target shown, but we should expect it to be achieved early in Monday's session. The target is worth shorting with a tight stop, especially if you can do it with a 'camo' trigger to limit risk. If this somewhat obvious Hidden Pivot gives way easily, don't assume that the new record highs that follow will leave the market's shills and cheerleaders groping for superlatives. In fact, we'll turn extra-cautious, since this would be a great opportunity for Mr Market to spring a bull trap worth remembering.
On the weekly chart, the futures have been on a 'mechanical' sell signal since mid-June. They seem in no hurry to do what they ought -- i.e., fall to the modest, 6959.00 target of the pattern shown. That would equate to a 7.5% correction from these levels and 9.5% from the record-high 7694 notched in the first week of June. That's the worst I could see at the moment, and it would be the kind of garden-variety correction that would draw in buyers who have been waiting for a token discount. But fear? Not hardly. The low would likely come in the middle of August, however, leaving enough time for plenty of fear to develop ahead of the November elections. Fear of what, you ask? The possibilities are too numerous to predict, so let's focus instead on ways to chase boredom during what promises to be a dull, glum summer on Wall Street.
Stocks fell hard on Tuesday when crazed traders pretended briefly to care about oil prices and the Middle East, but otherwise the broad averages gave ground only grudgingly as the week wore on. This was hardly a picture of strength, however, and so we should wait to see how sellers interact with the 7247.26 'D' correction target shown in the graph before inferring that a significant trend change has occurred. A rally to the green line (x=7548.38) in the meantime would trigger a 'mechanical' short, but I recommend the trade only if initiated with a 'camouflage' setup. The tactic is explained in detail in the Hidden Pivot course that I've made available free to subscribers.
The futures spent the last two sessions head-butting a modest midpoint Hidden Pivot resistance at 7582. You might think the failure to break through was a sign of weakness, but the opposite is true. Considering that no one but Trump and Vance is impressed with the cease-fire plan, and that the Fed is waxing hawkish, the lackluster performance of the S&P must be viewed as a volcano gathering subterranean force. The index hardly pulled back at all, and so we should expect it to launch anew on Monday, assuming Wall Street is not too hungover from Juneteenth craziness. Look for the E-Minis to ascend to D=7692.00, a sufficiently 'D' target to show tradeable stopping power. A dip first to the green line from above Thursday's highs, however unlikely, would trigger a tempting 'mechanical' buy, so be ready if you know how to handle it with a small-pattern (i.e., 'camo') trigger. _______ UPDATE (Jun 22, 11:27): Cancel the trade (or exit it now for a nice profit if you got long at the green line). Mr Market is doing his utmost to screw with our heads, first by dropping ES to within a single point of the green line at 1:00 a.m. before popping off a 71-point rally. He then plunged ES to the green line EXACTLY before embarking on the current, so-far 23-point, rally. Since no subscriber mentioned any of this in the chat room, I will assume everyone either slept through it or ignored the opportunity. _______ UPDATE (Jun 23, 12:21 p.m.): It's too early to say the bear market has finally begun, especially since the worst case I can offer for the moment is the 7266.00 target of this pattern. The futures are all but certain to get there, but sellers will have to demolish the Hidden Pivot support
