The selloff from July 24’s all-time high has now exceeded three important prior lows on the daily chart without an upward correction. For sure, it is a powerful impulse leg in the making, but we won’t be able to determine how powerful until we’ve seen how the futures behave after they’ve rallied and begun to fall anew. The most bullish scenario of all would be if the snap-back rally achieves new record highs without any significant pullbacks along the way. Conversely, if the rally falls shy of the July 24 top and the subsequent fall exceeds both its ‘p’ midpoint pivot and ‘D target, that would shorten the odds that we’ve entered a bear market.

Strictly speaking, there is no predicting at this point which of these scenarios will obtain. From a trading standpoint, however, we should be alert to the onset of the next rally, since it’s likely to be a doozy.  As I noted here earlier, increased volatility and the wild swings that create it are paradoxically more precisely predictable using the Hidden Pivot Method than are wafting rallies and tedious sideways corrections. We await such opportunities as this may provide. More immediately, if the futures continue lower, use the 1903.75 target shown as a minimum downside objective.  Night owls can short a retracement rally to p=1918.00 with a tight stop, assuming the futures have already dipped below it by at least 3-4 points. [Late breaking note: They didn’t.] You could also bottom-fish the D target with a stop-loss as tight as three ticks. Alternatively, if buyers prevail as the new week begins, they should be taken seriously — as in, new highs are quite possible —  once the futures have moved above 1939.00.