Rick Ackerman

With bullish seasonality at gale force ahead of the Fourth of July holiday, expectations were high for a rally on Thursday. Instead, bulls got sandbagged when stocks turned sharply lower ahead of the opening bell.  My hunch is that buyers will turn the tide before the week ends, but I wouldn't hazard a prediction about Monday, since the tape will barely be crawling on a non-holiday day that most traders are likely to punt.

Elsewhere on the Rick's Picks home page, I've offered a mildly bullish short-term projection for the E-Mini S&Ps. However, I proffer the Mini-Dow's chart (see inset) as a cautionary note, since Thursday's downdraft did impressive damage to the hourly chart. Specifically, it exceeded three prior lows, two of them 'external', without an upward correction.  We'll get a better sense of how serious this is if and when the futures roll over and take a second leg down. If it should reach or exceed the downtrending abc pattern's 'd' target, that would have bearish implications at least for the near term. For the moment, however, the September contract is rebounding moderately in after-hours trading. If the rally were to continue, exceeding the 21.454 'external' peak that I've labeled, DaBoyz would have shorts seriously on the run ahead of the holiday weekend. It will be interesting to see how things play out in any event, but I'd suggest watching from the sidelines on Friday unless you fancy tangling with a mongoose.

Judging from the way stocks tumbled on Thursday, everyone must have been at least as bullish as I was the night before. And why not? With the July Fourth holiday just ahead, seasonality strongly favored a rally. Alas, it was not to be. I doubt the selling will snowball in the days ahead, however. Actually, in after-hours trading, the futures tripped a 'counterintuitive' buy signal tied to a modest rally target at 2453.75.  Night owls who trade this vehicle should factor this into their game plans, along with the assumption that buyers will be able to push this vehicle at least to the 2428.00 midpoint Hidden Pivot straightaway. A decisive penetration of that resistance on first contact would strongly imply a continuation of the rally to 2453.75 over the next day or two. _______ UPDATE (Jun 30, 10:39 a.m. EDT): The futures rallied this morning to a so-far intraday high of 2428.25, a single tick above what we expect (see above) at a minimum for counterintuitive trades. They subsequently fell 10 points, implying bulls are lacking in enthusiasm and buying power this morning. The 2453.75 rally target continues to obtain nonetheless and will remain viable as a price objective unless 2402.25 is breached to the downside. Assuming the futures head moderately lower without exceeding the 2428.25 point 'C' of the pattern, the midpoint Hidden Pivot support lies at 2407.00. You can bottom-fish there with a 2407.25 bid, stop 2405.75.

We spent the hour scrounging for crumbs as the broad averages, driven by short-covering, reversed off menacing overnight lows. Even so, there were useful things to plot and observe, including a few 'mechanical' set-ups in some popular trading vehicles including TSLA, AMZN and MSFT.

The broad averages were in good position to turn ugly on Wednesday; instead, they turned sharply higher, probably to steal a march on shell-shocked bears ahead of a five-day holiday blowout. Because Independence Day falls on a Tuesday, trading volume is likely to start ratcheting lower around mid-day Thursday. Expect it to continue falling until Monday's closing bell. Prices are apt to waft higher over the entire period, given the ebullience of today's short squeeze reversal. Will sobriety return after the Fourth? We'll have to wait and see.

Wednesday's wrenching dipsy-doodle left a modest rally target at 2456.00 intact. If the futures had headed lower instead, it would have generated a major sell signal. In the actual event, although the overnight low threatened trouble, bulls seized control around 5 a.m. and ran the futures up to a threshold that left their dominance in little doubt as the weekend approaches. The stock market will be open on Monday, but with Independence Day falling on a Tuesday, we should expect the obligatory holiday slowdown to begin in earnest by mid-day Thursday. Prices presumably will have an upward bias, however, since today's short squeeze will have left bears with little enthusiasm for intercepting a yet another bullish stampede.

We began the day bidding for put options but backed away when DIA opened strong and forged higher. I now expect this vehicle to reach the 230.08 target shown. This is a major Hidden Pivot resistance, and although it's possible to extrapolate even higher projections up to 269.40 from the monthly chart, the pattern I've selected looks more likely to produce the major top we've been looking for.  At the very least, it should produce a tradeable top, and that's why we must be prepared to get short there with a stop-loss as tight as 1.00 point. How long might it take? My guess is three to  six weeks, judging from the dramatic way the bull market's trajectory has steepened since this phase of it began in August 2015.  If the target were to be reached in just three weeks, the implied 1600-point rally in the Dow would effect a blowoff worthy of the name.  We should be ready for it regardless, but in the meantime any swing trades we initiate should be from the long side. You should stay tuned to the chat room in real time if you're interested, since getting aboard with risk under tight control, presumably using 'camouflage' entry set-ups, will require very close attention to the lesser intraday charts.

My latest tout for the E-Mini S&Ps raises the possibility that the futures are about to trigger 'Matt's Curse'. The term, coined by a Rick's Picks subscriber who trades silver actively, holds that any rally that stalls out at the 'secondary Hidden Pivot' of an ABC-type pattern is warning of a potentially nasty trend reversal. For a graphic picture of this, check out the tout immediately below. If you don't subscribe but would like a free peek, click here to take a no-risk, two-week trial subscription. It will give you access to all of the site's features, intraday updates and bulletins, The Scoreboard and a 24/7 chat room that draws veteran traders from around the world.

There are two major 'structural' supports between here and 2400, and if they are breached within the next day or two, especially without a clearly discernible upward correction on the 240-minute chart shown (see inset), that would be something new and different technically speaking. For in fact, it would generate a bearish impulse leg of a degree not seen in 2017, or even in 2016. It would also activate 'Matt's Curse,' which, according the subscriber who coined the term, holds that any rally that fails decisively at p2, the 'secondary pivot', is in danger of falling beneath the pattern's point 'C' low -- in this case 2310.53.  It turns out that this same set-up is occurring in numerous other stocks and indexes that we follow. Could we be about to find out whether Matt, an inveterate trader of Silver futures, has discovered an indicator that will rank right up there with the recently confirmed, uber-bearish 'Hindenburg Omen'?