The most bearish thing I could say about this vehicle is that one would have to have been crazy to take a short position at the closing bell on Friday. The futures had been in a vertical rally for three days with no significant corrections. They stopped a hair shy of an external peak at 4472.00 recorded three weeks earlier, but it looked like a thin reed for bears to lean on. Yes, I’m all for taking bold positions in the ‘discomfort zone’, and this one verged on excruciating. But barring some headline catastrophe over the weekend — Mysterious Surge Fries U.S. Power Grid — there was no reason to think that last week’s lunatic leap would not continue. And even the EMP headline might not be greeted with sustained selling, since the usual institutional clowns would find a silver lining in the prospect of yet more Fed stimulus to counteract Armageddon. Here is what I foresee with high confidence, given the week-ending fist-pump through p=4422.25: a push to the 4584.50 target shown in this chart. ______ UPDATE (Oct 23): The futures continued along their rose-strewn path to at least 4584.50, oblivious to…everything. The pattern associated with our target is much too obvious to offer an easy shorting opportunity, since every drooler, village idiot and algo sees it too. However, it seems highly unlikely that the rally will push easily past it. We’ll look for trades in real time to squash the risk thereof, so stay tuned to the chat room if you’re interested. _______ UPDATE (Oct 26, 9:32 p.m.): The futures came down hard after topping at 4590.00. Although that’s just a tenth of a percent above my target, the overshoot is sufficient to leave me mildly bullish once the correction has run its course. How would we know if the target did catch a major high? Watch for minor, downtrending abc patterns to start exceeding their ‘d’ targets, and for ABC rallies to stall at p. For now, though, we hold no position, since the detailed short I posted in the chat room was stopped out for a loss of about $60 per contract before ES finally turned down. _______ UPDATE (Oct 29, 6:44 a.m.): The futures tripped a very appealing buy signal this morning at around 6:26, just after bottoming a single tick from the green line at 4559.00. Pivoteers can find the trade, with a trigger at 4560.50 and a partial exit moments ago at 4563.50, by planting ‘c’ at 4559.25 and ‘a’ at 4563.75 (5:44 a.m. on the two-minute chart). These details are somewhat sketchy for reasons I made clear during the last tutorial session. The big, conventional pattern in theory activated ‘Matt’s Curse’, so we should not be too ambitious for this run-up, since it could fulfill the Curse by relapsing below C=4543.75. The pattern is pretty but dangerously obvious — unless, that is, you turn it upside-down and backward to execute the trade, as we’ve been doing.
ESZ21 – December E-Mini S&P (Last:4564.50)
