E-Mini S&P

On paper, we're short two contracts -- effectively from 1413.00, since we covered two for a partial profit at 1405.00. For now, use a fixed stop at 1408.25 for one of them, and at 1411.50 for the other. On a one-cancels-other basis, you should also cover a third contract at 1391.00. Overall, this strategy for risk management lies somewhere between "swinging for the fences" and getting out with at least a small profit no matter what. One reason we are not going for broke on this one is that my big-picture forecast allows for a Dow rally above 14000.

The 1409.00 target shown, introduced here a week ago, remains valid and is still a logical place to attempt shorting this sometimes sludgepot.  Camouflage is the preferred way to go as always, and I'd suggest using the 5-minute chart if and when the rally reaches 1407.50. Easier but somewhat clumsier would be to initiate the short at 1409.00 with a 1410.25 stop-loss (as originally suggested).  I haven't exactly drum-rolled this target, but it has been long enough in coming that we should assume word of it has gotten around. That's why I am suggesting a 'camo' entry strategy unless you're feeling lazy.  If the trade survives till the final bell and is acknowledged in the chat room, I'll establish a tracking position for your further guidance. _______ UPDATE: My 1409.00 target -- stupidly, tediously, incorrigibly slow in coming -- hit a near-dead-center bullseye, since the futures have dropped to a so-far low of 1402.00 after topping this morning at 1409.50.  Cover half at current levels (around 1404.00) and let it ride with a 1410.00 stop-loss.  If we get more of a pullback, you know the drill: Swing for the fences, since, although it is extremely unlikely, there's always the chance we've caught a major top.  The trick -- and fun of it it -- is being able to make money when we are wrong, as we have done on perhaps 9 out of 10 of these 'pick the Mother of All Bear Rally Tops' trades. You can learn how to do this stuff yourself — and more easily than you might imagine.  Click here for a free trial subscription.

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Yesterday's projection caught the intraday low, 1390.50, precisely-to-the-tick. However, I'm not following through with tracking guidance because even though I'd suggested getting long down there, no one confirmed having done the trade in the chat room. Early Thursday morning, the rally was close to the 1403.25 target shown, but if it's exceeded the 1406.25 'D' Hidden Pivot of the even larger pattern shown will be in play. These numbers are tradable only by the very nimble, and so I'll leave it to camouflage-equipped night owls to find a way aboard if the opportunity should arise.

The futures poked their snout within a few ticks of a lame target at 1404.00, but they apparently were too winded at that point to go for the gusto at 1409.00.  That's a Hidden Pivot resistance, and the more we scrutinized it during yesterday's tutorial session, the more appealing it looked. We'll continue to keep it well in mind for shorting if and when the futures get there, but for now night owls can attempt to make hay with the downtrend shown. Camouflage is suggested if bottom-fishing, since the correction target coincides with a prior low.  UPDATE:  The 1390.50 target shown in the chart caught the exact low of the day. If you got long at the bottom, please let me know in the chat room so that I can establish a tracking position for your further guidance.  Trading on our customary guidelines, you might have one contract remaining from each original four.   Click here for details concerning the upcoming Hidden Pivot Webinar in September (and a $50 discount coupon if you register now).

The futures slithered somewhat closer to a 1404.00 target, recording an intraday high at 1395.75.  Although the target remains valid, it has become too boring at this point to care about. Another at 1409.00 now looks downright tradable, however, and so I'll suggest shorting there either via camouflage or with a stop-loss no wider that 1410.25.  The chart shows how compelling this Hidden Pivot is, but also how it too, like 1404.00, would start to lose its appeal if the futures take too long getting there. For that reason, I am making this trade recommendation good for today only. If 1409.00 is achieved it would imply an approximately 150-point rally in the Dow.

Friday's wilding spree achieved 30 of the 40 points I'd projected, leaving an as-yet-unfulfilled rally target at 1404.00. The schizophrenic rampage has turned suspiciously quiet Sunday night, with index futures trading a hair from their most recent settlement price. Under the circumstances, I'll leave it to the discretion of night owls and camouflageurs to find an entry hook amidst the flux of ho-hum and hi-ho.

I mentioned the prospect of a 40-point rally in today's commentary, and here it is in graphical terms. The C-D leg has been slow in its approach, to put it mildly, but the pattern itself is hardly farfetched. More immediately, the futures will need to resolve the bearish impulsiveness of yesterday's plunge. If the 1404 rally target shown is to be achieved, the downtrending abc shown in purple will reverse from its p midpoint or higher.  Camouflageurs can try bottom-fishing there if the pattern unfolds more or less as shown.  You can learn how to do this stuff yourself — and more easily than you might imagine.  Click here for a free trial subscription.

Last week's high missed our 1392.50 target by 4.50 points, and although it is still valid in theory it is no longer quite so appealing as a place to try to get short. (But by all means, try it anyway -- via camouflage -- if the Hidden Pivot should be closely approached today or tomorrow.) My hunch is that the futures will grope their way lower, eventually coming down to at least the textbook 'W' correction line of the pattern shown at 1353.50. Thence we might look for the 17-point thrust that would signal a resumption of the 66-point booster-stage rally begun on July 25 from 1321.25.  That implies a modest, speculative short from these levels for day traders,  but on the 5-minute chart where you would presumably be looking for such an opportunity, you'll see that the futures were bullishly struggling early Wednesday morning to reach, even, the midpoint support. _______ UPDATE (August 2, 1:22 a.m. EDT):  Following yesterday's tiresome action, there is no change in the advice given above. Night owls looking for something to do might be able to use a pattern taking shape on the lesser charts to do some tightly-stopped bottom-fishing. On the 30-minute chart, using the coordinates A=1380.00 (1:30 pm. EDT), B=1367.75 and C=1377.50, D=1365.25 is where you could look for the bounce.  If you're looking for an easier way than camouflage, simply bid 1365.25 with a stop-loss as tight as 1364.75 (!). _______ UPDATE (10:13 a.m. EDT): The overnight trade never came, and the target itself was pre-empted anyway when speculators drove the futures into their wonted headless chicken dance Thursday morning.  As if we needed yet more proof of what a bunch of morons, mental defectives and sociopaths animate the markets each day, here, from Google news, was the ostensible reason for