Bears should have been able to close the Dow down at least 1000 points on Monday. Instead they turned gutless before the session was even halfway over, driving the futures into a short-covering spasm that was continuing into the evening and had recouped more than half of the day's losses by around 8:30 p.m. The buying binge is attributable in part to the fact that DaBoyz had bullish control of AAPL all day long and would not let it touch 100. This is no surprise, considering DaDirtballs are covering shares that were shorted as high as $138 in the post-split rampage. Regarding the E-Mini S&Ps, they would trip a weak 'mechanical' short if they reach x=3347.50, the green line. The bearish target thereafter, D=3131.50 (see inset) is derived by sliding the point 'A' high up to the 3574.00 high recorded on September 3. We'll paper trade the short because it is not ideal due to the weak impulse leg. _______ UPDATE (Sep 23, 9:43 pm. ET): The two-day detour has not altered the odds of a fall to at least 3131.50.
The target we've been using at 3238.50 (corrected from a dyslexic 3228.50 given here earlier) still looks like minimum downside from here, but also a place to attempt bottom-fishing with a tight stop-loss, especially if you've been short on the way down. It can be used as well to 'mechanically' short the futures from either p=3329 or x=3374.25, although I am not recommending either trade explicitly until I've seen how the little sonofabitch opens Sunday night. As always, a decisive penetration of the 'D' support, especially on first contact, would telegraph even more weakness to come.
The corrective pattern furnished here Thursday night is still on-track to fall to its D target, which for the December contract is 3233.00, nine points lower. Friday's fake overnight waft narrowly missed triggering a juicy short when it failed by a few points to reach the green line. Now, although a run-up to the line would trigger a second signal, I am not recommending the trade unless you know how to cut the risk with an rABC set-up. Bottom-fishing at p2=3278.25 with a tight stop-loss or 'counterintuitive' set-up will be simpler, as will similar tactics at D=3233.00. A decisive overshoot of D would be bearish. _______ UPDATE (Sep 15, 4:38 p.m. ET): The trade came within an inch of getting stopped out, but I am still in love with the pattern, although no longer the odds. An old Hidden Pivot rule says that if a beautiful set-up doesn't work, do the opposite. In this case, however, I am not recommending trading with a bullish bias because I don't trust the rally. Move to the sidelines for now. Here's the chart. _______ UPDATE (Sep 16, 5:04 p.m.): This is exactly what I was talking about when I said Mr. Market was doing his utmost to keep bears from getting short. This kind of price action is damned near impossible to short, at least with entry risk under tight control. _______ UPDATE (Sep 17, 10:33 p.m.): Call me a masochist, but I'm still in love with the pattern shown. It's stopped out bears no fewer than twice this week, and the D target at 3238.50 is slightly higher than the original, but that's where the futures are headed -- for sure! -- even if they get there without any of us patient, cautious, super-smart bears aboard.
I was more eager to short this rabid weasel when it tiptoed to within an inch of the 3402.75 target last week. However, the subsequent dive-and-bounce histrionics seem too strenuous to produce a merely marginal higher high when index futures resume trading Sunday night. To get just a step ahead of hard technical evidence, my gut feeling is that the futures will blow past p with such force that we can confidently assume they are one their way to the 3486.00 target of the pattern shown. You can short 3402.75 nonetheless, but approach it as a day trade -- i.e., with a tight stop and expectations of just a small profit. This one may trigger Sunday evening, so night owls should be alert to that possibility when they return to their screens. _______ UPDATE (Aug 24, 6:27 p.m.): After a stumble in the first hour, the futures powered their way to another impressive gain. They should be presumed headed most immediately to at least 3444.38, the 'secondary' Hidden Pivot of the pattern projecting to 3486.00. Be alert to a possible stall there and, provided you know how, an opportunity to get short using an 'rABC' setup on the lesser intraday charts. _______ UPDATE (Aug 25, 6:18 p.m.): The 3486.00 target has the potential to create a major top, and I'd suggest you get short there in some way or fashion, even if it means interpolating with puts in SPY. I will be traveling tomorrow and not in the trading room, but you should stay close to the room for crowdsourced ideas if you're interested in the trade. The 3486.00 target has been drum-rolled for long enough to be mildly jinxed, but don't let that put you off. It deserves to be shorted come what may. If the futures blow past
Since triggering a profitable 'mechanical' trade Sunday night, the futures have been unable to extend the rally even to the secondary Hidden Pivot at 2687, much less the pattern's D target at 2781. Panic selling and buying have ebbed, leaving the playing field to traders who have found interesting ways to pass the time until the pandemic story mutates in some significant way, for better or worse. Swings of 50-100 points have become routine, and the only worrisome thing about this is that worry has been replaced by, if not complacency, then a tense kind of boredom. For our purposes, although the D target remains theoretically viable, trades in either direction are best orchestrated on the lesser charts where swings of perhaps 10-15 points occur all day long.
Hey, don't shoot me, I'm only the messenger, but the biggest one-day rally in history failed by a significant margin to reach its D target. That would be 2720.50, as the chart shows, but buyers sputtered out nearly 50 points shy of this Hidden Pivot resistance. It was worse than that, actually, since the A-B leg of the pattern shown wasn't even impulsive, strictly speaking, since its point 'B' high failed to surpass any 'external' peaks. Can you smell fake? In any event, I'm not going to suggest getting in the way of the upthrust, fake or not. We'll just have to wait and see what Sunday night/Monday morning brings before we place any bets. If you are following this vehicle's charts yourself, don't be intimidated by the size of the swings. The way they play out and their predictability is exactly the same as if they were insignificant moves on a one-minute chart. That's how you should view them if you want to cut the moves down to tradeable size. ______ UPDATE (Mar 15, 11:35 p.m.): Regulatory circuit breakers have arrested the futures' hellish plunge Sunday night, but I don't see how the June contract, which settled Friday at 2684, can avoid plummeting all the way to 2204 (!) eventually, circuit breakers or not. That target would be an odds-on bet as far as I'm concerned if p=2450.75, the midpoint Hidden Pivot in this hourly chart gets schmeissed when stocks open Monday morning. This would equate to an approximately 4600-point fall in the Dow Industrials, to 18,500. _____ UPDATE (Mar 18, 9:04 p.m.): Although the 2204 downside target remains quite viable, we'll need to respect today's short squeeze off the lows, since it generated a bullish impulse leg on the hourly chart.
Cue the kettle drums, because here's the no-brainer trade-of-the-month I promised that is designed to make your Rick's Picks subscription effectively free. We'll risk a theoretical $84 on it, but if it doesn't work, keep in mind that just a few of the juicy 'half-a-brainer' trades posted in the Trading Room over the last week or so -- trades you evidently didn't want to bother with -- could easily have produced gains totaling $5,000 or more. To initiate this one, bid 26.84 for 400 shares, stop 26.63, day order. This is akin to catching a falling piano, and the stop-loss is tighter, probably, than what you are used to. Nor do I have to tell you that merely training on an exact number where we expect a significant price reversal to occur, and for hundreds of subscribers to make an easy $200-$500 on the rally, is enough to queer its magic power. In any event, the precise entry strategy is how the Hidden Pivot Method rolls, and you can expect the 26.82 midpoint support to work precisely or not at all. (Actually, if it were to be exceeded by 70 to 80 cents, a rally back up to the green line would make GDX an attractive short.) Have fun! _______ UPDATE (Mar 10, 12:20 p.m. EDT): Yeah, that was fun all right. The trade was stopped out quickly for an $84 loss as gold was getting pounded by a short-squeeze rally in stocks. Don't think that because GDX looks like hell today it won't go even lower tomorrow. With today's unexpected penetration of p=26.82, GDX has signaled more downside to p2=25.24, or possible even D=23.66. This is congruent with a $1.00 drop in Silver that appears imminent. Gold futures, however, are inconclusive and can be traded from either side of
Just because the E-Mini S&Ps were down by a record-breaking 225 points today doesn't mean the selling is over. Expect the futures to fall further 140.75 points, at least, before they can attempt to bottom. That would leave them at 2592.75, a Hidden Pivot support shown in the chart. The pattern lacks a distinctive point 'A' high, but the weak one I've chosen should be good enough for government work. No matter which top is used, it wouldn't change the fact that sellers obliterated a midpoint pivot at or near 2864.88, telegraphing yet more weakness to come. A slight adjustment in 'A' yields an alternative target at 2603.40, so be ready for a turn from there as well. _______ UPDATE (Mar 11. 10:08 p.m.): I still expect the futures to reverse course at or very near one of the two targets flagged above. If they eventually relapse below these Hidden Pivot supports, you should infer that more slippage to 2447.75 is likely. At that point the S&P futures will have corrected 28% from the all-time high at 3995 achieved just three weeks ago. That would not necessarily mean the bear market is over. More likely would be the start of a Stage 2 that could see stocks grind bulls and bears alike to dust over the next year or so. ______ UPDATE (Mar 12, 9:10 p.m.): It is bearish that so clear and promising a Hidden Pivot support as the one at 2447.75 proffered above has given way so quickly. Since most trading algorithms have the IQ of a grapefruit seed, we should expect the machines to test the key low at 2316 recorded in late December. Look for a rally from somewhere very near there, but I cannot tell you how best to trade it until such time as
The tempo of pandemic horror stories quickened over the weekend, implying that bulls and bears who bought into Friday afternoon's short-covering binge may have set themselves up for a sacking. We'll know by the time you read this, but my hunch is the DaBoyz will pull their bids when index futures start to trade late Sunday afternoon, letting shares fall beneath Friday's lows before stepping in. This will be tricky even for DaSleazeballs, since an onslaught of market orders from those unable to trade off-hours could hit when the regular session opens. The key support to watch is the 2808.25 target of the pattern shown. It is conservative, since we could wind up pushing the point 'A' toward the record highs achieved just before the pandemic selloff began globally. In any event, all rallies, no matter how powerful or intimidating, should be viewed as opportunities to get short. Since many if not most traders are thinking exactly that, the rallies are bound to exceed the limits of the bearish imagination. Remember, the role of the short squeeze is not only to obliterate bears, but to keep bulls in the game -- all the way to the bottom.
On their way lower, the futures have bounced twice precisely from the 2972.63 midpoint Hidden Pivot of the pattern shown, validating the pattern itself and its 2808.25 target. That doesn't mean sellers are certain to pound it down to that level, but odds of this happening would surely increase if p is decisively exceeded to the downside. How decisively? A two-day close beneath 2972 would suffice, or a plunge hitting 2940 (or so) intraday. If instead the support holds and the next up-cycle exceeds the 3182.00 'external' peak recorded on February 26, that would imply a retest of the old record high is likely.
