Yesterday’s nasty head-fake squandered a minor, bullish impulse leg on the hourly chart, but a bigger one is very much intact and presumably waiting to be exploited by DaBoyz.  The proximal cause of the selloff was a downbeat pronouncement on the economy by Bernanke, who evidently can no longer hope that “bad” news will be received on Wall Street as “good” news for stocks. Perhaps if the Fed considers taking administered rates below zero, traders will get back in the spirit of things, always hoping for yet more easing whenever it looks like the economy is doing another kamikaze.

Concerning the E-Mini futures, I’ve displayed them on the 240-minute chart so that you can see how little damage was done when They pulled the rug out late in the session. In theory it will take a rally of at least 9.50 points to get a C-D follow-through leg under way.  From that point, the move would have an additional 28 points of upside potential — equivalent to a Dow rally of close to 300 points. Most immediately, with the futures in a tightly engineered holding pattern shortly after midnight, night owls and camoflageurs should monitor the 5-minute chart for the subtly impulsive blip that could signal a resumption of the bull trend. ______ UPDATE (10:40 a.m. EDT):  We’d grown so accustomed to short-squeeze rallies launched off shallow corrections that this morning’s long-squeeze collapse off a shallow distribution came as both a surprise and a delight. It always feels right as rain when stocks are moving synchronously with the economy, and so the selloff has come as a bracing acknowledgment of a darkening reality. Pivoteers may have noticed that the so-far low came within less than a single point of the 1258.75 target predicted on the hourly chart by these Hidden Pivot coordinates: A=1293.75 (June 22, 3 p.m.), B=1274.50 and C=1278.00.