ESH12

Yesterday's nasty short squeeze fell 5 points shy of a minor, 1403.50 target, favoring yet a little more upside progress Tuesday night. This would offer a scalp-trade opportunity at best for night owls, since immediate prospects appear to be somewhat limited. If the futures should effortlessly surpass the 1403.50 Hidden Pivot, however, the 1419.75 'D' target of a pattern of greater degree (see inset) would be in play -- would be an odds-on bet, actually, since its 1379.25 midpoint sibling was obliterated by yesterday's take-no-prisoners charge.

Monday night, with a news backdrop utterly devoid of interest, DaBoyz appear nonetheless to have  short-squeezed this vehicle an impressive 14 points -- equivalent to more than a hundred Dow points.  However, because nine points of the rally seem to have occurred in the space of a single one-minute bar, it's possible the price spike is a bad print. In any case, because of the haywire price action, you should no longer attempt to get short via camouflage as originally advised. (If you did so anyway via a straight 1181.00 offer, stop 1182.25, please let me know in the chat room how the trade worked out, since it's not clear whether there were any fills between 1379 and 1385.) If it turns out the spike was legit, it would imply the so-far 7.50-point pullback is likely to produce a C-D follow-through attempt.  If so, its strength should be telegraphed clearly by the ease with which it gets through the midpoint resistance.  On the 25-tick chart, as of around midnight, it lay at 1382.75, tied to a 1387.75 target.

Two peaks near 1377 recorded two weeks ago remain the key challenge for bulls over the near term. Once above them, however, the futures would become an odds-on bet to go just a bit farther, at least, to 1381.25, a Hidden Pivot identified here earlier that can be shorted either via camouflage or, with somewhat greater risk, via a 1381.00 offer, stop 1382.25.  As before, if you take the latter approach, exit half of the by-then-profitable position at 1377.25 and use a trailing stop suited to your style for the rest. This trade is particularly appealing because once the futures are above the 1377 highs, "everyone" will be bullish and bears at their most despairing. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

Bulls regained command yesterday after impaling no fewer than four 'external' peaks on the hourly chart and closing this vehicle near the intraday high. There's little point in focusing on Hidden Pivot targets just above, since any I might offer are overshadowed by the resistance of two important peaks at 1377 recorded respectively on February 29 and March 1.  Once above them, the futures would become an odds-on bet to hit 1381.25, the target of the pattern shown. That number is shortable via camouflage; or, more simply but with more risk, using a 1381.00 offer, stop 1382.25. If you use the latter strategy, exit half the by-then-profitable position at 1377.25 and use a trailing stop suited to your style for the rest.

Bulls shouldn't get too cocky, since the most notable -- and suspicious -- fact about yesterday's rally was its failure by three ticks to hurdle the external peak at 1354.75 created during Tuesday's selloff.  As always, Da Sleazeballs were looking Wednesday night to accomplish via a short-squeeze on non-existent volume what they could not during regular hours. The set-up for this all-too-familiar con-game is the relatively shallow pullback from Wednesday's intraday high, 1354.25.  Lest we mistake a push through that peak as significant, let's raise the bar to 1362.50 today -- a tick above a second 'external' peak shown in the chart.  If bulls can get there today, we'll have to take them seriously. Again. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

Sellers tore through every minor Hidden  Pivot support one could find yesterday, pausing at last above a series of key structural supports in the 1330s created a month ago (see inset).  We'll be better able to gauge whether this is corrective or impulsive when we've seen how the supports handle the downtrend. Until then, trading this vehicle will be catch-as-catch-can.  Night owls will find plenty of "camouflage" cover on the 5-minute chart. Note especially the 1344.25 peak recorded just after noon on Tuesday -- a bullish breakout point for us that few others will notice or care about.

For ten weeks, stocks have been ratcheting relentlessly higher, perhaps inuring us to the possibility that the stock market is going to fall apart one of these days.  However, rather than twiddling our thumbs waiting for the next, presumably inevitable, short squeeze, let's be ready lest we miss the downturn.  Accordingly, I'll suggest setting a screen alert at 1352.75, just beneath the #2 external low shown in the chart. Keep in mind that sellers would have to push the futures through both lows without an upward correction in order for the move to be considered truly impulsive. More immediately, there was nothing remotely interesting happening Monday night.

The futures have been struggling for more than a week to reach a modest target at 1385.25, but their slog evinced a hint of failure on Thursday with a peak that missed impulsing above the previous day's high by just two ticks. It is tempting to infer that the rally is losing its guts, even with a flood tide of global funny money to float stocks higher.  Lest we pronounce the Mother of All Bear Rallies dead prematurely, however, we'll infer that the broad averages are simply waiting for the mote of "good" news it will take to re-animate the hysteria of shorts to goose this vehicle to its next rally target. More than any other force, it is short-covering that has been driving the rally through resistance levels for three years. Meanwhile, and most immediately, night owls can use the 1362.75 target of the pattern show to bottom-fish with a stop-loss as tight as 1.00 point. _______ UPDATE (9:39 a.m. EST): Sunday night's stage-managed weakness overshot the target, bottoming at  1360.50 and stopping us out for a nominal loss per contract of $50.50.  The action is short-term bearish, notwithstanding the weak short-squeeze rally into this morning's opening.  For the record, if you'd tried to use "camouflage" for getting in near the low, there were no single-bar points 'C' to work with, and therefore no entry opportunities of the kind we seek. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details

The futures look bound most immediately for 1380.75, a Hidden Pivot that I identified during yesterday's impromptu online trading session and posted in the chat room shortly thereafter. The move is too mature for a camo entry attempt, although you could try shorting at the target with a stop-loss as tight as three ticks. Be aware, however, that if the stop is hit the futures would be signaling more upside to the 1396.25 target of a pattern that comes from the daily chart: A=1296.00 (1/30); B=1358.00 (2/15); and C= 1334.25 (2/16).