The chart (inset) reminds us that the so-far 1340-point rally from October’s 14179 low is still merely corrective relative to the nasty downdraft that preceded it.  Even so, it may be wishful think for bears to assume that a major top is in.  In the first place, the series of higher highs and lows traced out since April is bullish on its face, notwithstanding the ‘outlier’ October low.  But what is perhaps even more striking is the lack of drama in the gently uptrending consolidation of the last six months. Nowhere in this chart do we find evidence of the sort of craziness we might expect to see if the most powerful bull market in U.S. history is nearing a finale At the very least, we should be looking for a steep run-up to new all-time highs — the kind of bull-trap spike that leaves bulls giddy with hubris and bears too devastated to participate in the ensuing collapse.

Admittedly, the possibility of new highs goes against our own, strong gut feeling that the combination of weakening corporate earnings, the precipitous reversal of the real estate boom and the economically devastating blow of Obamacare’s huge new tax on the middle class will prove powerful enough to reverse the so-far feeble effects of the Fed’s all-out stimulus. As a practical matter, we’ll be attempting to stake out short positions with puts and calls that will enable us to make money betting against the market even if it continues to forge higher.  Mainly, this will entail legging into options spreads in which the bearish legs are initiated at the Hidden Pivot targets of intermediate-term rallies. In the E-Mini S&P futures, for example, we expect such an opportunity to occur with a run-up to a precise target not far above the recent all-time high at 1754.50. If you want a front-row seat, either to trade or simply to spectate, click here for a risk-free two-week subscription to Rick’s Picks that will give you access to our daily trading ‘touts’ and to a 24/7 chat room that draws veteran traders from around the world.