The 4324.50 rally target shown, a 4% climb from here, has two things to recommend it: 1) the ABCD pattern is too gnarly to get noticed by anyone but us; and 2) it assumes yet another boring leg up in a 12-year-plus bull market whose last gasp has become difficult to imagine let alone predict. Rather than try, we’ll simply accept the all-but-inevitable for now and go with the flow. There is just one small caveat: Friday’s high stopped out shorts whose hopes had accumulated over a two-day period before getting bayonetted. That implies that if the so-far pullback does not intensify Sunday night/Monday, shorts are setting themselves up to get murdered again. Juicy as it is, do not plan on shorting the 4324.50 target unless you have made some bucks on the way up. Alternatively, in the unlikely event the futures fall hard when the week begins, use p=4084.50 as a minimum — and precise — downside target (A=4230.25 on the hourly chart, 5/10/21). The short would trigger at x=4134.75. _______ UPDATE (May 25, 5:16 p.m. ET): Weakness tripped a ‘reverse abc’ sell signal at 4181.75 about an hour before the close. Immediate potential is to p=4150.75, with a 4213.00 stop-loss that implies initial theoretical risk of around $1500 per contract. I’d recommend paring that down to $200-$300 or so by executing the trade camouflage-style on the five-minute chart. You can also paper-trade this one if you are new to ‘rabc’ entries and camouflage. _______ UPDATE (May 26, 5:25 p.m.): The short is still live and looks pretty good, actually. This is notwithstanding the fact that the position remains in the red and that bulls have been extremely reluctant to let this brick fall. _______ UPDATE (May 27, 6:10 p.m.): Oh, well. The position is a micron from being stopped out by a wafting rally that benefited from the approaching three-day weekend and a flurry of short-covering in the final hour. There is zero enthusiasm behind the buying, but with no sellers in sight, stocks are simply taking the path of least resistance.
ESM21 – June E-Mini S&PS (Last:4211.25)