Bears’ inability to deliver a knockout punch yesterday left them struggling for the entire session to make even modest progress toward the two downside targets shown. They would become slight underdogs if the weak short-squeeze in evidence on Wednesday punches past peaks #1 and #2 (see inset), particularly in the early going. Not being clairvoyant, I won’t hazard a guess about which way this Punch ‘n’ Judy show will go on Thursday. If the broad averages turn significantly lower, however, use the 1952.25 target flagged here the other day as a worst-case low for the near term. If hit, this Hidden Pivot will likely be tradable with a stop-loss as tight as you can abide. As always, you can bottom-fish more aggressively if you’ve racked up gains on the way down. More immediately, three of the Hidden Pivot levels shown — x, p and p2 — can be used to initiate ‘mechanical’ trades, either from the long or short side. For real-time guidance in this task, tune to the Rick’s Picks chat room. _______ UPDATE (January 7, 12:12 p.m. EST): Sellers have been crushing minor Hidden Pivot supports, implying that we’ll need to use bigger patterns to identify important swing lows precisely. In this case, we’ll use A=2110.00 (7/20/15) from the daily chart. It projects minimum downside at the moment to p2=1888.44 (!) The D target associated with this pattern lies at 1817.00, about 7% below current levels. That would represent a drop of about 13% from last summer’s record highs.
