The mindless herd breathed a collective sigh of relief over the tariff tizzy's latest cliffhanger, celebrating its resolution with a short squeeze up their own wazoos that played out mostly on a single day, Wednesday. The spree left the futures just shy of a 6984.00 target that is nothing special, although its decisive breach would suggest a possible breakout above the range that has asphyxiated the S&Ps since Halloween. More likely is a drop back into the valley, whose floor lies as much as 1400 points below. The 6984.00 target is shortable, but you could also attempt a ride to it, since it is all but certain to be reached. _______ UPDATE (Jan 27, 9:28 p.m.): ES is breaking out, as painful as it is for me to believe. See my comments in the chat room.
The futures were on a 'mechanical' sell signal to D=6925.25 when the week ended. It came in the final hour of the session, well after the trade was triggered 'conventionally' on the way down on Thursday afternoon. Price action continued a lengthening string of Fridays so boring that a trader fixated on his screen could fall into a trance. We may not know for a few weeks or longer whether this has been topping action or alternatively a consolidation for a run at higher prices. In any event, I wouldn't suggest bottom-fishing at the target of the pattern shown, since it is compromised by a coincident low on Wednesday that is bound to attract a thousand clowns. ______ UPDATE (Jan 19, 12:40 a.m.): Sellers went bananas over more Trump tariff bullshit, sending the futures down to 6911.00 so far. That's 2.0 points from the 6909.00 target I billboarded in the chat room last Tuesday as a back-up-the-truck number. It still is, provided you know how to set up a 'camo' trigger on the hourly chart. The tactic is explained in detail in the Hidden Pivot Course I've made available free to subscribers. _______ UPDATE (Jan 20, 10:10 a.m.): Sellers crushed the 6909.00 support, putting the futures on course for a rendezvous with 6819.75 or worse. In theory, 6869 has triggered a 'mechanical' buy and would be the second signaled at the green line of a bullish pattern that projects to 7163 (60-min, A=6596 on Nov 21). That pattern would be wrecked, however, and stopped out, with a print at 6771.00.
Since nothing seems to slow this beast down, I've used the 'D' target of a pattern stretching back to mid-November to project minimum upside to 7163.25 over the near term. Although bulls did not penetrate its p midpoint decisively in their first two attempts, they've shown irresistible power for so long that we have to assume that any rally target will be achieved. Even so, this one is sufficiently compelling that there is likely to be tradeable resistance there. Short it with a small-interval (i.e., 'camo') trigger, but be prepared to cover at least a portion for a small profit.
The futures were on a tortuous path down to the 6833.25 target shown, a Hidden Pivot 'D' target where you can try bottom-fishing with a 'camo' (i.e., short- interval) trigger using a reverse pattern (rABC). The bounces along the way grew increasingly gratuitous and violent as the week drew to a close, but none went quite high enough to trigger a mechanical short. (The only trade indicated so far was a 'conventional' short at the green line.) That's why if the trade fills, you should take profits on at least half of your position on a one-level gain to p2 (6873.44).
The reverse head-and-shoulders pattern shown yields a target up near 7,250, implying that 2026 will begin with a bullish bang. I don't often refer to H&S patterns because they can be found anywhere one looks for them. However, there is no denying that they describe a telling picture of supply and demand, and that bulls have the upper hand in the picture shown. From a Hidden Pivot standpoint, a mere 7026.50 is as high as I can comfortably project. That implies the head-and-shoulders effect will be stillborn, a possibility to which we should remain open-minded but without bias. If buyers blow past that number, it would shorten the odds of a follow-through to 7250 or so.
DaBoyz are showing increasing strain as they struggle to keep this hoax aloft. The week ended with the third consecutive Friday when nothing happened. The day was over on the opening bar, an opportunistic short squeeze that leveraged the absence of 'sells' on the order book as the session began. All this aside, we should expect the futures to notch a new record high at 7026.50 in this holiday-shortened week, pending a move through the midpoint resistance at 6899.00. A pullback to the green line (x= 6835.25) can be bought 'mechanically', stop 6771.00, using a 'camo' trigger to pare risk. ______ UPDATE (Dec 24, 12:07 p.m.): It's hard to imagine who would want to be short the S&Ps, especially heading into Christmas/New Year's, but short-covering nonetheless is almost solely what is driving the rally. This morning's effortless move through a Hidden Pivot midpoint resistance at 6967.38 (A= 6596.25 on 11/21, hourly) has not only made 7026.50 a lock (see above), it has put that pattern's 7163.25 target well in play.
The futures looked so heavy on Friday that I was tempted to switch to a bearish, big-picture chart that requires a drop to 6654 to trigger a theoretical sell signal. Instead, I've focused on a smaller time frame that can give us a more nuanced picture without the drama. The midpoint Hidden Pivot at 6864.25 will not likely be useful for bottom-fishing because it coincides with Friday's low. However, we can still monitor price action closely at p2=6838.00 and D=6812.00 closely to determine whether bears might be gaining the upper hand. An easy breach of D on first contact would be evidence of this, so be alert to the possibility.
Friday's dirge provided yet more evidence that the bull is dying. With weekly options expiring, even undercapitalized pishers can do 100,000-share conversions and reversals all day long without risk. And yet, for all the phony volume, the day was over by mid-session, when the E-Minis peaked three-hundredths of a percentage point shy of a 6907.50 target that had been drum-rolled here for nearly two weeks. It was nearly seven weeks in coming, and so we might have expected a significant reversal when it was hit. Instead, the futures fell a measly 40 points, caught a tired bounce, then leveled off for the rest of the day. I hesitate to say a top is in, much less the top. But if the irresistible force that has been pushing stocks skyward since 2009 re-emerges on Monday, as is likely, be prepared for more-of-the-same up to at least 6925.00, a Rick's Picks voodoo number.
Bears dove for cover last week after a three-day short squeeze left them with the dim prospect of trying to obstruct a missile bound for new record highs. The 6907.50 target shown was a lock by Tuesday afternoon, when the futures not only punctured the midpoint Hidden Pivot resistance at 6226.25, but closed slightly above it. The question now is how much stopping power the target will show. If little or none, we can expect the rally to continue to at least 6938.00, a target calculated by sliding the 'a' low five bars to the left, to 6540.25. Above it there is only one logical target left: 7499.75. It comes from a blended monthly chart (A=3502.00, on 10/31/22), and although it will be good enough for government work, we shouldn't expect it to show precise stopping power.
If the futures relapse early in the week, looks for tradable support to develop at 6483.50, a voodoo number. However, we should be careful not to underestimate the potential power of this bear rally, especially if it blows a hole in p=6716.25, a Hidden Pivot resistance that can serve as a minimum upside objective for the near term. Above it there are three 'hidden' resistance points we can monitor to gauge trend strength. They lie at 6768.50, 6812.00 and 6907.50, respectively, and a penetration of each would imply the next is likely to be reached. The last would fall somewhat shy of the old record high at 6953.75 recorded on October 30. Since a new high could conceivably create a devastating bull trap, we should be more cautious than ever at those heights, and not without skeptici sm.
