The bull ran out of fumes well shy of an important target at 4413.75 last week, perhaps because the ABC pattern with which it is associated was too obvious to too many, even those who know nothing about the Hidden Pivot Method. It’s not as though we are the only traders who see and use such patterns. In any event, the anticlimactic rally leaves open the matter of whether the futures have made a major top. My gut feeling is that they haven’t, but I am open to the possibility that a significant downtrend has begun. To avoid being wishy-washy about it, I will keep a close eye on minor, ostensibly corrective downtrends, since the hallmark of a bear market is abcd corrections that routinely start exceeding their ‘d’ targets. Here is just such a pattern that left the futures dangling in a a crucial spot when the week ended. Another bear giveaway is when rallies fail to achieve their D targets, or still worse, fail to even reach their midpoint (p) Hidden Pivots. We’ll be watching for that as well. ______ UPDATE (Jul 19, 6:02 p.m.): Sellers crushed the 4316.00 downside target shown in the chart linked above, suggesting that a major selloff has begun. If you bottom-fished the low, including in DIA, as some subscribers appear to have done, don’t be greedy about taking profits. ______ UPDATE (Jul 20, 1:50 p.m.): I am suspicious of the bounce but have resolved to trade it strictly by-the-numbers. I already missed a great ‘mechanical’ opportunity to get long yesterday at p=4216, but I don’t fancy letting another slip by me. The next could be a short from D=4413.75 (our old friend); or, because the pattern is so obvious, from somewhere just below it. That implies the next high could be a fake-out marginally above last week’s record 4384.50. For inspiration and insight, here are two thousand-dollar winners from this afternoon alone.
ESU21 – Sep E-Mini S&P (Last:4314.25)