How do you short a market that can’t seem to mount a sustained rally? One answer is to get long a tick or two ahead of the feeble rallies that are occurring, and to use any profits thereof to cushion shorts from minor corrective peaks. The viability of this strategy is corroborated by the chart shown. Notice that the only bounce on Friday worthy of the name came from within two ticks of a 2075.25 Hidden Pivot target. This suggests that this vehicle is moving obediently and precisely to our numbers, at least for the time being. If this observation is to hold, the next tradable bounce will come from within a tick or two of 2063.50, a Hidden Pivot that is the ‘D’ target of the abc pattern I’ve labeled in red.
Incidentally, I’ve heard from one subscriber who said he did not want to wait for the perfect moment to get short. He laid out E-Mini S&P contracts at 2089.75 and 2086.25 yesterday with the goal of ‘swinging for the fences’. Of course, if the stock market is about to go to hell, it will not much matter whether one got short at a ‘good’ price. That said, our game plan will be to continue to look for trades in places where risk can be held to a practical minimum. _______ UPDATE (9:47 a.m. EDT): The futures crushed the support before the opening, falling to a low of 2061.00. This hinted that the bounce that followed was destined to go nowhere. A mechanical short from p=2076.00, stop 2083.00, would be targeted on 2054.25. On the hourly chart. Here’s the pattern: A=2113.25 on 6/3, at 11 a.m.; B=2075.75 on 6/5, at 10:00 a.m.