Buyers shredded a key resistance on Friday, leaving little doubt about whether they’ll achieve the 2728.25 target shown in the chart. It lies 57 points above, and if and when the futures get there, the Dow Industrials, which settled at 24,706, will be trading for around 25,200. In an update sent out Thursday night I’d suggested getting short if stocks rallied strongly to end the week but pulled back in the final hour. The fact that they barely pulled back at all will have left bears badly on the ropes, where they will remain unless some horrific headline over the weekend bails them out. In the chat room before the close, I mentioned taking a small short position, but this was just a token contrarian bet based on the rally’s unstoppable look.______ UPDATE (Jan 22, 10:46 p.m. ET): Tuesday’s plunge brought a tinge of doubt to the 2728.25 projection, but it will remain valid in theory until such time as sellers exceed the point ‘C’ low at 2567.25. Actually, ES would become a mechanical buy in theory if it comes down to 2607.50 (the green line in the chart)._______ UPDATE (Jan 23, 5:09 p.m.): The futures bounced from 2612.50, five points above our tripwire for a mechanical buy. It remains viable, although I’ll suggest paper trading this one unless you know how to convert the set-up to ‘camouflage’ in order to cut the initial risk of about $2000 per contract down to as little as $60.
