More than six years into the bull market, it’s clear that bears must still fight for every inch, even on days like yesterday, when there was no bullish news to hold stocks buoyant. Six hours of headless-chicken price action brought the futures only marginally closer to the downside target at 2052.00 noted in my last tout. Today’s analysis comes with a fresh chart showing a lesser pattern that will likely be more useful for short-term traders. The bounce from p=2082.25 has validated the pattern while also opening the door to shorting ‘p’ mechanically’ if price action near that number meets our simple rules. I offer this trade with the caveat that bears might have to endure more than their fair share of pain just to gain a few measly points. Focus on the big picture, however, which suggests the bull market begun in 2009 may already have topped, and it may be easier to deal with the inevitable whipsaws. _______ UPDATE (August 5, 11:03 a.m. EDT): The future never dipped below the 2082.50 pivot, so the short trade never triggered. Instead, they got goosed sharply via a short squeeze that projected as high as 2127.75 most immediately. The pattern’s midpoint pivot at 2104.00 has been penetrated within the last hour, shortening the odds of a continuation at least to p2=2116.00. Accordingly, you should position mechanical trades from the long side.
