Although Friday’s huge rally was ‘only’ a mindless short-squeeze, that doesn’t mean the mindlessness cannot continue for a while. Seasonality will be strongly on the side of bulls for the next few weeks in any case, and that’s why I would counsel permabears not to get their hopes too high just because of yesterday’s moderate retracement. Our old target at 2126.25 remains valid as a minimum upside objective, and although we’ll want to short there aggressively if and when it’s reached, I would advise caution to those of you who can’t wait. For Tuesday, use the pattern shown to guide your trades, whether from the long side or the short. A tightly stopped sale at p=2089.00 looks like it would offer excellent odds; but then, so would a ‘mechanical’ buy from that price if and when it has been exceeded by at least four points. As always, consider an easy push past p or p2 as a sign that the next Hidden Pivot above it is likely to be reached.________ UPDATE (8:42 a.m. EST): Sellers have crushed the futures overnight, delighting bears and raising the prospect that all of Friday’s misbegotten gains will be surrended by day’s end. At the moment, a minor, bearish pattern from A=2094.50, a one-off high recorded on Monday, yields an immediate downside projection at 2052.00. I can all but guarantee a tradable bounce from that number, give or take no more than a few ticks, if it’s reached. However, it is a larger, bearish pattern (see inset) that should lift the mood of bears even more. The very precise bounce yesterday from p=2063.88 confirms the pattern and its ‘D’ target at 2032.25. First, though, look for minimum downside to p2=2048.06, where another precisely tradable bounce seems highly likely. If 2032.25 is reached, that would surpass last Thursday’s bombed-out bottom by eight points, opening a path to even lower prices.
