We’ve been using an ambitious, 2851.75 rally target to keep our minds off reality, but more immediately there is 2789.25, a Hidden Pivot that I expect to produce a tradeable pullback. My recommendation is to get short there only if you’ve profited from the uptrend. Elsewhere on the home page, I’ve reproduced a graph that shows how the Dow is nearing levels where, from a visual standpoint, a rally to new record highs will begin to look inevitable. As much could be said of the E-Mini S&Ps, which lie just shy of a series of three peaks made just before December’s steep plunge. It’s more than a little tempting to think an ascent to new all-time highs would set up a devastating bull trap. This is something to ponder as the stock market does the seemingly impossible, climbing a mile-high wall of worry. ______ UPDATE (Feb 19, 6:02 p.m.): Feeble buying pushed the futures to 2787.50, less than two points from the target flagged above. It remains valid, but any progress above it would likely encounter resistance at 2795.91. That Hidden Pivot should be the end of the uptrend, at least for a short while._______ UPDATE Feb 21, 8:39 a.m. ET): Upthrusts have continued to exceed minor Hidden Pivot targets, suggesting the futures want to go higher. The rally has been untradeable if keeping risk:reward at 1:3, since each new marginal high has given way to a pullback greatly exceeding the incremental gain from peak-to-peak. Here’s a way around it, a mechanical set-up that would allow entry via a limit bid and a single stop-loss. Be aware, however, that the initial risk on a four-contract position would be $2800, for a potential gain of as much as $8200 if D=2811.25 is reached. As always, you could cut this down significantly by using a ‘camouflage’ set-up. It would be far more labor-intensive than a mechanical entry, but it has the potential to reduce theoretical entry risk by as much as 95%. _______ UPDATE (10:28 a.m.): I’ve exited the trade for a small profit, as noted in the chat room. It still looks like a decent bet — I rate it a ‘7.5’ — but if you stay with it be prepared for a tedious and possibly stressful slog. It would seem DaBoyz are unable to corral enough bears today to get a short-squeeze going, at least so far._______ UPDATE (Feb 21, 6:05 p.m.): The futures came nowhere near the 2756.25 stop-loss, and the position was slightly profitable at the close. However, the trade is taking so long to get off the launching pad that I can no longer recommend it enthusiastically. I still regard it as no worse than an even-odds-on bet to reach the target.
