ESU10

It was all downhill yesterday after the opening bar, and you can look for the same, dead-tired, bull-trap con-game again this morning, except with perhaps even less energy. Regardless of whether the first hour will be as good as it gets, night owls can bottom-fish a Hidden Pivot support at 1098.25 with a stop-loss as tight as two ticks. The relevant pattern is shown in the accompanying chart. _____ UPDATE (12:45 p.m. EDT):  Today's "action" is indeed almost too tiresome to watch. Cancel the bottom-fishing bid, lest the demands it makes on one's attentiveness arrest the heart. 

We deconstructed yesterday's rally during the weekly tutorial session and found only rubbish -- in this instance, gratuitous chop driven by feeble buying and an absence of urgent selling. Bulls held a small edge at the bell, but you might as well flip a coin to guess which way things will break Thursday morning. A look-to-the-left peak at 1142.75 (May 18) is still the number to beat if DaBoyz want to trap bulls and bears.

The futures took a drubbing yesterday and appeared bound for at least 1089.00 at the close. That's a minor Hidden Pivot midpoint, but if it's bruised we can infer the more selling awaits with the potential to reach its 'd' sibling at 1081.25. This is just little stuff, but keep in mind that the weakness could come all the way down to 1063.50 and still be considered a healthy retracement of a still-robust bull trend. That would represent a 0.618 correction of the rally begun from 1037.50 on August 31, and it could set the stage for a powerful new rally leg with 70 points of potential.  The onset of such a rally would be signaled by a booster-stage thrust of 17.50 points beginning from anywhere north of 1063.50.

DaBoyz refreshed, revitalized and extended their summer-long bull trap on Friday with a push above a 1098.50 peak that had been noted here earlier. This means that the rally has surpassed not only the single internal and external peaks required to signal a proper impulse leg, but a second "external" peak for good measure.  They will not get likely past a third without a significant correction, however, since that would imply a further, unpaused rally to at least 1128.00.  If this were to occur, we would want to have yet one more benchmark in reserve to test the mettle of buyers. Accordingly, I'll stipulate that they must exceed the summer solstice high at 1129.50, and thence the May 18 high at 1142.75,  before we are obliged to act impressed.  As always, it is not merely the surpassing of prior peaks that will tell us how much buying power remains, but the way in which they are surpassed. For example, a thrust that exceeds two peaks without a b-c pullback should be regarded as more powerful than one that exceeds three peaks with one or two retracements along the way.

To repeat:  The bullish impulse leg created by Thursday's high is likely to influence price action for a while to come -- perhaps 5-7 days or longer -- and the implications would grow still more bullish if the futures are able to push above 1098.50 without pulling back to create a b-c correction on the daily chart.  Even if they were to do so, they could retrace all the way down to 1057.25 without damaging the bullish case one bit.  Please note that any booster-stage rally of 13.25 points from within the range 1057.25-1068.50 should be considered a downpayment on a thrust to as high as 1121.50.

By pushing above a prior peak at 1080.25 that I'd noted here yesterday, the futures created a robustly bullish impulse leg of daily-chart degree that is likely to have positive implications beyond the Labor Day holiday. The outlook would grow still more bullish if the rally were to exceed a third peak at 1098.50 either today or tomorrow.  Alternatively, sellers would have to push this vehicle down to 1013.25(!), exceeding a low from July 6, to negate the bullishness of yesterday's move.  The best "camouflaged" entry opportunity I can foresee at the moment (i.e., around 12:53 a.m. EDT Thursday) would trigger at 1079.25, based on the pattern shown in the chart, and the odds would be best if this occurs overnight. The midpoint resistance lies at 1081.00, and longs from just below it could breathe a sigh of relief if it's exceeded, since that would imply an easy ride to the 'D' target at 1084.75.  _______ UPDATE 1:13 a.m.):  Just to be annoying, the little scuzball has made a lower point 'C', changing the entry trigger to 1078.25 and the midpoint resistance to 1080.00. You'll be on your own if this little cat-and-mouse game continues into the night. _______ Further UPDATE (9:39 a.m. EDT):  Entry at the new trigger point would have produced a low-stress trade, since the futures went on to achieve 1084.75. As a practical matter, however, the trade would have been less than ideal because the point 'C' low of the pattern was formed from multiple bars, not the single one that I (much) prefer.

The futures were rallying without purpose and for no particular reason early Wednesday morning, achieving a so-far high just two ticks off a minor Hidden Pivot target at 1059.25 (60m chart, A=1037.50 on 8/31; B=1054.25, C=1042.50). That's probably as far as DaBoyz will be able to manipulate this vehicle in off-hours trading, but if they manage to achieve slightly more -- say, 1060.50 or higher -- it would imply they've got something more brazen in mind for later.  Could they push this hoax all the way to 1080.25, turning the hourly chart bullish? Anything's possible, of course, but you'd probably get better odds betting the Baltimore Orioles will capture a wild-card berth in the divisional playoffs. ______ UPDATE (12:10 p.m. EDT):  "GO, Orioles?!"

Yesterday's moderate drop can be ignored, just like all the others, and the rallies as well, since it only served to bring the Dow down to 10000. Let the Indoos close below that marquee number for two consecutive weekly bars, however, and then we can infer it's more than mere noise. That is not to suggest I'm bullish, incidentally. Far from it, and I wouldn't be surprised if April's 1211.25 peak stands for fifty years. More immediately, a bunch of patterns on the intraday charts all point lower, albeit without much clarity, to the following Hidden Pivot supports: 1029.50, 1011.25 and 1001.00. Take your pick, but please note that none of these numbers is worth bottom-fishing without camouflage that would limit risk to three ticks. Finally, and for what it's worth, bulls would need to hit 1080.50 today to get some, anything, going.

The burden of proof has weighed on bulls since the summer solstice high (1129.50), which contained the gutless, month-long short-squeeze that unfolded following Independence Day. From current levels, buyers would need to reach 1098.75 in a sprint, since that's what it would take to turn the daily chart bullish for the first time in ten weeks. The hourly chart already is bullish, but it took some brazen manipulation to make it that way, including a news-driven trampoline short-squeeze off Friday's double-bottom low.