If last week’s tortuous, ratcheting downtrend is the best that sellers can do with a collapse in trade talks to help them, then we should take Friday’s bullish finishing stroke as a valid ‘buy’ signal. I’d written here earlier that a failure to produce an agreement between the U.S. and China would not be bearish for stocks, but instead prove to be a case of sell the rumor, buy the news. If this is so, and barring the always-possible Sunday night surprise, we should see the futures push above p=2910.75 (click on inset) on Monday or Tuesday. A subsequent pullback to the green line from our sweet spot between p=2901 and p2=2953 would trip a ‘mechanical’ buy signal. _______ UPDATE (May 13, 6:35 a.m. ET): Overnight, the futures have given up two-thirds of the very substantial gain they achieved via Friday’s explosive short squeeze. If DaBoyz have to take the futures down by 40 points just to dry up sellers this morning, stocks are in worse shape than I’d thought. The rallies have become almost too scary to short, but also too fleeting to distribute. That’s dangerous. Our best bet — effectively against sanity, and still reasonably priced — is VXX calls. _______ UPDATE (May 13, 11:23 a.m.):  The buy triggered at 2821.81. The implied initial risk per contract, using a 2726.00 stop-loss, is $4750 per contract, or $19,000 for a four-contract position. Best to paper trade this one to see if it works. If so, it should add to your confidence in mechanical trades in general. _______ UPDATE (May 14, 10:48 a.m.): If you took a position with real money as some subscribers appear to have done, book profits on half near 2838 — $850 per contract at the moment — and use a break-even stop-loss for what remains. We’ll swing for the fences now, meaning 2910, or possibly even 2995.