September

We’re short a single contract from 2004.25 after covering three others on the way down. I’d suggested a wide stop-loss for this trade, since the futures broke sharply after our “camouflage” entry at 1200.00.  Labor Day trading has sent this vehicle plummeting anew, yielding a target of 1129.00 as of around 11 a.m. EDT (see chart).  Based on a so-far low of 1138.25, leaving 10.50 points of profit potential, and risk:reward held constant at 1:3 throughout the trade, we should be using a stop-loss no higher than 1141.75.  However, because the futures have bounced and are already trading above that number, let’s use a “structural” stop-loss at  1148.50 that lies a tick above a peak-let made this morning enroute to the low.  The stop should be worked one-cancels other with a closing bid at 1129.75, three ticks above the target.  If we cover at the higher stop, the theoretical profit per contract would be about $2775. _______ UPDATE (9:55 a.m. EDT): With the futures in a headless-chicken frenzy of pointless, panicky  ups and downs, we covered near 1148.50 around 3:10 a.m.  The theoretical gain would have been slightly less than $2800 per contract. At the moment, the hourly chart reflects “dueling” impulse legs, although a print down at 1132.50 would settle the skirmish in bears’ favor.  This is what I expect to happen, and I would therefore suggest that you look for opportunities to get short rather than long.  Alternatively, a rally exceeding 1162.50 would tip the short-term outlook bullish.

The futures sputtered out well shy of a 1241.00 rally target after topping three ticks above a lesser target at 1227.75.  The selloff was strongly impulsive, breaching two internal and two external lows on the daily chart.  The move could be shortable, especially by night owls, since the tail end was developing into a small abc pattern with a midpoint yet to occur. Beware of a possible bounce when that happens, however, since that will probably be the futures’ best opportunity to finish the week on an upstroke.  _______ UPDATE (1179.50): The pattern worked very closely to the way I’d drawn it, triggering a 1200.00 short-entry ‘x’ at around 3:15 after single-bar coordinates had been formed at points b and c.  Half the position would have been covered at 1199.00 (aka ‘p’;) and half of whatever remained at 1196.75 (the ‘d’ target of our small camouflage pattern).  For your further guidance, I am establishing a tracking position that leaves us  short one contract with a 2004.25 basis that has been adjusted for theoretical profit-taking at the price points given above.  Since the futures left no ‘external’ peaks on the wild opening bars that we could use for placing a stop-loss, and because seasonality will have turned very bearish when Wall Street’s brainless trading algorithms return to work on Tuesday, we’ll swing for the fences and let the single-contract position ride with a stop-loss at 2001.25.