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
Another shocker: QQQ vaulted like a flea on a hotplate to within 4 cents of the 369.02 Hidden Pivot we used last week as a minimum upside objective. The stall there raises the same theoretical question that I asked in relation to a similarly precarious finish for the E-Mini S&Ps: Could this have been the last gasp of the biggest bull market ever? The obvious answer: Naaahhhh! So where to next? The 'reverse' pattern shown in the chart implies to at least 373.13, and I judge this to be all but certain given the way the Cubes gapped through the 361.73 midpoint Hidden Pivot on Thursday. For the record, however, a 381.00 target corresponds to the one I've given for the E-Mini S&Ps and rated as highly likely to be achieved. The starting point for both patterns is a distinctive low recorded on July 19. Please note that a surprise plunge to p=361.73, or more favorably to 356.02, would trigger 'mechanical' buy signals with appropriate stops.
The rally from September 29's low at 21.60 has 'Matt's Curse' going for it if little else. This trading rule, formulated by subscriber Matt Barnes, holds that a reversal from very close to p2, the secondary pivot, is a good bet to stop out the pattern. I'd originally rated a 'mechanical' short at x=23.80 a so-so bet, but given the precise low at p2, I am no longer recommending the trade (other than via a 'camouflage' set-up, since that can reduce entry risk by as much as 90%, providing attractive odds for an otherwise risky speculation). We'll see what Monday brings, but if you're jones-ing to trade this howling banshee, stay close to the chat room. ______ UPDATE (Oct 23): The steep rally of the last three weeks came with a zillionth of an inch on Friday of validating 'the Curse'. It would have occurred with a push above the 24.95 point 'C' high of the bearish pattern pictured here. The breakout we are likely to see next week will provide an opportunity to get short in the 'discomfort zone', but let's do so gingerly if at all, since bulls may at long last be getting the upper hand.
IWM's short-squeeze gap past an 'internal' peak from September 27 is a weak breakout but a breakout nonetheless and therefore tradeable with a bullish bias. That's notwithstanding the fact that Friday's peak into a roomy discomfort zone set up a short that was nicely profitable by Friday's close. The pullback should be seen as merely corrective, however, rather than the beginning of yet another return to the bottom of a tedious range that long ago ceased to hold our attention. I'm not going to day-trade this vehicle for you, but I'll gladly vet any actionable trading ideas you bring to the chat room. My hunch is that a 'mechanical' set-up on a lesser chat will be up to the task. ______ UPDATE (Oct 27, 9:12 p.m.): If this nasty correction comes down to x=218.76, it would trip a 'mechanical' buy, stop 213.82. We would not be shooting for a run-up to D=233.55, only to p=223.69, at least to begin with. _______ UPDATE (Oct 28, 8:43 p.m.): The 233.25 target is where IWM is going, and there is no doubt about it.
Corn tripped a faint buy signal at 544 5/8 ten days ago, the first since another signaled in May got stopped out a month ago. This is a bull market just waiting for a sign, any sign, that it's safe to exit the lengthy consolidation that has tied traders in knots for the last five months. The rally is not yet impulsive on the daily chart, but we can use the reverse pattern to get long at or below its d=523 6/8, in the 'discomfort zone', since it is bullishly impulsive on the hourly chart. Notice that the c-d leg of the pattern consistently signaled winning 'mechanical' shorts, but that traders would have endured considerable pain before cashing out. ______ UPDATE (Oct 12, 9:49 p.m.): Corn made a very tradeable low at 519-2/8 before leaping to a so-far high tonight at 525-2/8. The trade suggested above could have been worth around $200 if you caught it with a tight rABC. I am holding a single contract myself, the last of four, for a swing at the fences. ______ UPDATE (Oct 13, 4:12 p.m.): No home run this time. I exited the position overnight after the futures went into screw-the-pooch mode for a few hours before plummeting. The realized gain on four contacts was $388. Corn looks like hell, so I won't suggest anything new.
I sense a melt-up is coming, and soon. Bulls face just one significant obstacle in their quest for new all-time highs: the 4472.00 'external' peak recorded on September 27. Once above it, the old record at 4529 would turn magnetic, drawing the futures higher without seriously taxing buyers; short-covering bears would do all the work. Alternatively, a moderate fall could tell us whether this is likely. Specifically, if sellers drive ES down to the 4314.50 midpoint support of this pattern, an easy penetration would suggest bears are in charge, at least for the time being. It could also set up an enticing bottom-fishing opportunity, since we would be using a very tight stop-loss that anticipated a turn from 4314.50 exactly, give or take no more than a point or two. _____ UPDATE (Oct 11, 8:45 p.m.): So far it looks more like a nascent meltdown. Price action is too nutty in any event to be worthy of our serious attention or even speculation at the moment. _______ UPDATE (Oct 14, 7:54 a.m.): Apologies for the belated update, since I emphasized in commentary that went out Sunday night that this ostensible 'bear rally' is going to new all-time highs. As I also mentioned, DaSleazeballs running this carnival midway show are accomplishing this with short-squeezes in the dead of night, when there is almost no selling pressure. This allows a 'fake' rally to keep on chugging while using up almost no bullish buying power. String together enough phony rallies that surpass previous peaks with stealth rather than power, and eventually you are talking about the real thing, a melt-up.
Price action last week was as agitated as we've seen in a while, with bulls and bears locked in a seeming fight to the death. We'll side with the latter for now, but only for purposes of drawing a chart we can use to assess trend strength in either direction. If the 'C' high at 365.65 is taken out as the week begins, I'll likely redraw the graph to reflect a stronger bullish bias. For now, though, we can look for Friday's moderate weakness to continue. If it sends the Cubes down to p=353.93, you can bottom-fish there with a very tight stop-loss. Call options might work if the upturn is sharp enough, but don't go out more than a week, and use options priced for 0.60 or less. _______ UPDATE (Oct 14, 11:15 p.m.): Today's short-squeeze spasm above the 'C' high of the bearish pattern has generated a rally target at 369.02 (15-min, a=353.15 on 10/6 at 10:35 a.m.). Let's see how the herd handles it on a Friday.
The bounce from p2 is bullish, since it turned the futures around well shy of the bearish 'D' target at 20.36. The bad news, at least for bulls, is that the December contract would trigger a 'mechanical' short if the rally continues to the green line at 23.80. I would rate the trade a 6.6, meaning it is neither strongly enticing nor for everyone. We can attempt it nonetheless if there is sufficient interest in the chat room. Presumably, we'd use a 'camouflage' set-up, since a conventional entry would face initial risk of $23,000 theoretical on four contracts. _____ UPDATE (Oct 14, 11:20 p.m.): There's no point trying to be a hero as the week draws to a close. For all we know, the rally could be the real deal. Let's simply observe for now.
Bertie's brutish poke through the 54,914 Hidden Pivot resistance shown here left little doubt about where its fat-cat sponsors are taking it next. Shifting to a bullish ABCD pattern of higher degree yields a 64,871 target that should be used as a minimum upside projection for the near term. The nasty C-D leg has yet to gift bulls with a 'mechanical' buying opportunity, so we won't count on one. Trading interest has all but vanished from the chat room lately, but I'll be around as always if you want to bounce a timely idea off me. _____ UPDATE (Oct 19, 9:12 p.m. ET): Time once again to raise our sights — this time to 89,780, the highest target I can project using the larger charts. Judging from the way the usual lunatics chased this vehicle through the red line (p=59,302), more upside to at least p2=74,542 looks all but certain. Every level of the pattern — x, p and p2 — will be in play for ‘mechanical’ entries, with a ‘camouflage’ alternative if were are not blessed with any pullbacks violent enough for the ‘mechanical’ set-up. _______ UPDATE (Oct 21,, 8:46 a.m.): This morning's violent swoon has reminded us why Bertie is not for amateurs. The $4289 dip-on-steroids undoubtedly shook out a few rubes, although the fat cats, including banks with no actual skin in the game, couldn't have cared less about their fleeting losses. This chart shows that the shakedown, nasty as it was, wasn't quite severe enough to bring Bertie down to the green line, where a no-brainer 'mechanical' bid could have been waiting. However, the red line (p=63,308 here) could have been used as well, albeit with more initial risk, using a stop-loss at 61,876 that easily held. _______ UPDATE (Oct 21, 6:10 p.m.): A 'mechanical' bid
Our attention is wasted looking for this dog to break out, since it has been going tediously sideways since January. Hope springs eternal, of course, but we needn't take unnecessary risks to indulge it. It's simply a matter of when the chimpanzees agree that 'value' stocks should be in vogue once again. They'll let us know after they've goosed it beyond easy reach, implying that the only way to get aboard is when it is going tediously sideways. However, the very rightmost edge of the chart -- the last four bars, actually -- contains the impulsive rudiments we would need to attempt this. Query me in the chat room and I'll explain with a more detailed chart. _______ UPDATE (Oct 12, 9:58 p.m.): The 30-minute chart has stopped out bulls no fewer than three times since last Thursday, implying that IWM is trying hard to break out with no fans aboard. We probably won't be either, since catching a ride with risk under tight control is too labor-intensive for a vehicle that few subscribers seem to care about. ______ UPDATE (Oct 14, 11:24 p.m.): How very shocking. IWM opened on a gap this morning that would have left any hesitant bulls choking on dust. Let's see how far DaBoyz can take this short squeeze on a Friday. Wherever it stops, it is guaranteed to be too dangerous a place for taking a position over the weekend.
