The rally would need to continue for at least a couple more days before it becomes mildly persuasive. I’d suggest setting an alert at 2899.50, since that would generate a robustly bullish impulse leg on the hourly chart. Although I recommended a mechanical buy on Monday at 2821.25, only a couple of subscribers reported doing the trade, one of them by substituting SPY options. I’m not going to establish tracking guidance for this position, although I will continue to provide informal updates here and in the Trading Room. There was $4750 per contract at risk initially, and that’s why I suggested paper trading this one. To the extent it works, it should increase your confidence in ‘mechanical’ trades while diminishing your reluctance to pull the trigger on one. In the meantime, I’ve advised subscribers who were in the trade to take half of the position off near 2838, for a theoretical gain of about $850 per contract. The swing-for-the-fences target is 2910, or possibly even 2995. At the higher number, a two-contract position would show a theoretical profit of about $18,000. _____ UPDATE (May 16, 4:06 p.m.): Buyers narrowly missed our bullish benchmark at 2899.50, but they are likely to try again as the week draws to a close. The ‘mechanical’ long position is still live, and I’ll now recommend exiting one of the two contracts that remain at 2917.75. ______ UPDATE (May 19, 10:16 p.m.): Exit another contract at current levels, around 2868.50, for an additional theoretical gain of around $1500. The futures feel leaden, so we should stick with 2899.50 as a bullish benchmark. _______ UPDATE (May 21, 9:03 p.m.): Zzzzzzzz. _______ UPDATE (May 23, 8:32 a.m.): Index futures have gotten pummeled overnight. This one should continue falling to at least 2815.75 before reversing. Here’s the chart. _______ UPDATE (May 23, 11:35 p.m.): The futures caught a 13-point bounce from a low at 2815.25 that was two ticks beneath the target flagged above. They subsequently relapsed 23 points before short-covering into the close drove them to a recovery high at 2830.50. What’s next? Not much of interest that I can discern, although tonight’s rally looks pretty feeble.
