The futures have dropped 174 points, or 4%, since briefly poking slightly above a compelling Hidden Pivot target at 3938 two weeks ago. I’d expected last week to bring greater clarity to the question of whether a major top is in, but it must remain a ‘suspected top’ for the time being. That implies short-squeeze feints will continue to plague bears who have many good reasons to think they may have finally gotten it right. I smell a top myself, but even my near-certitude doesn’t make holding a short position at these levels any easier. It will have been worth the wait only if and when the stock market plunges for three consecutive days with unexpected ferocity. Until then, however, nervous jitters will persist. You can use a modest, 3767.75 downside target for now. It is remarkable that this Hidden Pivot support was not hit on Friday, presumably because nervous short-covering was more powerful than fearful selling. The balance could shift this week, but I’m not going out on a limb with a bold prediction. ______ UPDATE (Mar 1, 6:43 p.m. EST): Permabear that I am, I love to sneer at rallies that only seem powerful. This one at its apex failed to get past even a single ‘external’ peak on the hourly chart, so it was not impulsive, merely corrective. A print at 3935.00 would be more impressive, but until such time as that occurs, consider this effusion just a garden-variety bear rally. Be sure to check the chat-room discussion from today, since I connect the dots as they pertain to various rally targets for, respectively, QQQ, the E-Mini S&Ps and DIA. Keep in mind that if stocks are topping, they will do so in a way that will make it almost impossible to get short without weathering enormous damage. To avoid playing Mr Market’s deadly little game, I will recommend getting short only in very precise places (see my DIA tout for a practical example).
ESH21 – March E-Mini S&Ps (Last:3905.00)