ESH13

The rampage that I'd said could end the week is looking more like a quiet consolidation in the wee hours of Friday morning.  This is understandable, given the dour economic news that has crossed the tape in the last two days.  It's also par for the course that the onslaught of bad news seems incapable of generating any real selling, only a shallow correction.  I doubt that stocks will take off today, but camouflageurs should keep 'turnaround Tuesday' well in mind if the goal ahead of the next surge.

Check out the chart to refamiliarize yourself with the 1594.25 target we've been using as a minimum upside objective. Given Friday's nasty swoon, the red-line midpoint at 1562.00, is not exactly a point of consolidation, but yesterday's spike through it implies nonetheless that our target is still a good bet to be reached, and soon. Camouflageurs should play only from the long side, looking for impulsive patterns that meet our simple criteria on charts of five-minute degree or less. As of around 2:25 a.m. EDT, a minor bullish pattern on the 10-minute pointed to 1574.00 thus: A=1566.00 (4/9 at 11:20 a.m.); B=1569.00  (3:00 p.m.); and C=1561.00 (9:10 p.m.).  X entry at 1564.25 (not a camo x, incidentally, but one of higher degree) is a single tick from being hit, and once this has occurred, you should do your camo-hunting on charts of lesser degree.  Click here for details about the upcoming seminar on 'Camouflage Trading', plus a $50 discount.

A long-term rally target at 1535.25 has been obliterated with last week's surge, having been surpassed by a decisive 12.50 points. We'll keep a close eye on things just to make sure it's no bull trap, but the evidence so far suggests that significantly higher highs lie ahead. A logical target for now is the 1624.75 Hidden Pivot resistance shown.  Although this ignores several ABC patterns of larger degree, it gives us a precise number to shoot for that will remain viable no matter what the bigger picture might say.  A stall at its midpoint sibling, 1551.00, would corroborate this.

Yes, we're getting close, for sure. But you'll need to check the archive for the precise location of a longstanding target that I've said looks very short-able.  It's a 'whisper number' that I've avoided drum-rolling publicly so that paying subscribers can have first crack  at it. Keep in mind, though, that all of the potentially important tops I've signaled since this Mother of All Bear Rallies began four years ago have fallen, and odds are not exactly favorable that this pivot will prove to be The One. Still, I would be most surprised if it didn't evince stopping power that is, if not decisive, at least noticeable.  Since it is a 'watched' number that we are fixing to short, I'll recommend doing so via camouflage.  However, f I were to boldly lay out shorts at a particular price, using a tight stop, I'd short the pivot itself with a stop-loss exactly 2.00 points above it.

A 1532.00 target is the lowest of three we can extrapolate from a series of descending lows, but it's sufficient to represent a breakout above highs from the last two weeks.  The target isn't worth much for trading purposes, although another at 1541.25 would be in play if the first is exceeded by more than a few ticks. Camouflageurs eager to pounce should view breakouts not as hysterical events, but as A-B impulse legs that beget 'x' entry triggers that can be exploited almost risklessly.  Your best opportunities in this case would come from the very subtlest impulsive ABC's that meet our simple criteria.

The dirtballs who work the night shift on Sundays tend almost without fail to fade small sell-offs and rallies. With the futures down about 5 points late Sunday night, the implication is that DaBoyz are depleting sellers in preparation for a short-squeeze opening on the usual vaporous volume Monday morning. This makes any rally in the first hour or so a short, but you should do so only via camouflage.  I don't have a good midpoint resistance to help in this task, since Thursday's peak failed to impulse above Monday's on the hourly chart. However, a subjective rationale for getting short such as the one noted above should be good enough for government work. _______ UPDATE (10:46 a.m. EST):  The futures did in fact hit their so-far intraday high 25 minutes into the session, and it fell exactly one tick from the 1516.75 target of (1-min) A=1511.50; B=1515.00; C=1513.25. However, unless you shorted the target itself with a microtight stop-loss, there was no way in via camouflage. If you’re curious about 'camouflage' trading and Hidden Pivot Analysis, click here for a free seven-day trial to Rick's Picks. It will allow you to go anywhere on the site, including the 24/7 chat room, and to receive intraday e-mail bulletins that contain real-time trading ideas.

All of yesterday's gasping, wheezing and hacking couldn't push the futures above Monday's high (see inset), adding to the suspicion that these rallies are just setting the hook for bulls.  Just one more measly tick to the upside would have turned Thursday's price action into a bullish impulse leg on the hourly chart. Alas, the intraday peak merely tied Monday's. This means, moreover, that any upthrust that gets past it now must be viewed skeptically; for, as we know, the kind of buying that can keep going doesn't need pullbacks and running start to clear what in this case was not even a primary peak (i.e., 1530.00), but a secondary one. Even so, I wouldn't hazard a prediction concerning what DaSleazeballs might attempt on a Friday. And because there's still an outstanding rally target that I've been drum-rolling for a month,  it would be premature for me to write an epitaph. The target is accessible in the archive, but if you're not a paid subscriber click here for a free seven-day trial. It will allow you to go anywhere on the site, including the 24/7 chat room, and to receive intraday e-mail bulletins that contain real-time trading ideas.

A C-D follow-through with a pitch as steep as yesterday's impulsive plunge seems unlikely, given the buy-the-dips mentality that has kept stocks buoyant for the last four years. However, since the cause of the weakness so far is almost surely something bigger than Italy's election, as the newsmongers would have us believe, we shouldn't expect the usual snap-back rally. We'll know more about the mood of sellers when we've seen how this vehicle interacts with the p midpoint support of the next down-leg (see chart).  An easy breach of the support would suggest the correction is waxing rather than waning.

Although technically speaking it is presumptuous to say this, the stock market's cheerless, reflexive steps higher almost each and every day now feel like a march to the gallows.  Granted, there would seem to be no alternative to the by-now-relentless ascent of shares, given that they are being driven by a monetary blowout global in scope and unprecedented in magnitude.  Even so, hope springs eternal that this pernicious and presumably doomed dynamic will end soon, administering the shock that will jolt humanity back to the realization that there is no free lunch. For our part, we are looking to get short at a very specific price and in a certain way. Our strategic options are detailed in yesterday's tout, and so I'll suggest that you call it up from the archive if you are uncertain about how to proceed.  I am not divulging my target publicly to non-subscribers, since, the fewer traders paying attention to it, the greater the odds it will work precisely.