Short covering on Friday drove the futures decisively past a major p2 (secondary ) Hidden Pivot at 4200.44 that had stymied bulls for three weeks. It also left the June contract sitting above the 4222 p2 of a much larger pattern. This means we should expect a further rally to the 4536.50 ‘D’ target over the next 5-8 weeks. A pullback to the red line that would set up a mechanical buying opportunity seems most unlikely, so we’ll need to stay alert to entry opportunities on the lesser charts in order to catch a ride. _______ UPDATE (May 10, 5:07 p.m. ET): A few more refreshing selloffs like today’s would begin to look interesting, especially if they occur between now and Friday. Specifically, an uncorrected drop exceeding the 4110.50 ‘external’ low shown in this chart would generate the first bearish impulse leg we’ve enjoyed on the ‘daily’ since February 2020. _______ UPDATE (May 11, 10:45 p.m.): Hard selling in the morning drove the futures down to 4103.75, creating the bearish impulse leg noted above. Numerous subscribers reported using an rABC pattern I posted in the Trading Room to get long near the intraday low and to catch a ride of as much as 32 points to a target at 4146.50 also provided. Bulls spent the remainder of the session head-butting that number, a Hidden Pivot, without much success. If they fail again today and the reaction move gets legs, this selloff would begin to look interesting, since it would represent an extremely rare third straight day of steep declines. _______ UPDATE (May 12, 11:09 p.m.) Now wasn’t that refreshing! Subscribers shouldn’t have been too surprised, given my dour outlook lately. The S&Ps have gotten hit hard for three straight days, and we might hope for even more ahead of the weekend. That’s because investors ridden with angst early in the week do not often shrug it off on Thursday/Friday. A dozen reasons for the selloff will be cited by Bloomberg et al., but all of them will be wrong. Consider that the market fell simply because it was time for it to fall. ______ UPDATE (May 13, 6:10 p.m.): Bears couldn’t prevail for a fourth straight day and were on the run at the close. Even so, the correction reached D (precisely, but inconveniently before dawn) rather than turning from p as we might expect in a strong uptrend. The bounce was strongly impulsive on the hourly chart nonetheless, so look for the futures to finish at least moderately higher on Friday. My gut feeling is that the selloff is not over. Here’s the chart.
ESM21 – June E-Mini S&PS (Last:4111.25)