E-Mini S&P

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.

A thousand points here, a thousand points there, and pretty soon we're talking about a real rally. But is it? I'll reserve judgment until AAPL, the closest thing we have to 'the fat lady', sings. As I've pointed out here many times in the past, AAPL is the only stock one need get right in order to get the stock market right. Regardless, there is nothing I can presently imagine that will stop the futures from achieving the 3206.25 target shown in the chart. During today's session, I'd been eager to get short at p=3069, but witnessing the persistence with which short-covering bears munched through it has made the next upthrust seem all but inevitable. I may try shorting p2=3147.94 anyway, if only because it seems extremely unlikely to stop the charge. The contrarian thing. But I will do so only with risk controlled down to bupkis.

The March contract has opened 40 points lower tonight, suggesting the pros are confident they can re-energize Friday's short squeeze once the suckers who dumped market orders on the first bars are out of the way. Before this quasi-criminal operation gets under way in earnest, however, expect a retest below the 2889.25 opening bar. The 2884.00 downside target we used on Friday served us well, with many subscribers reporting big gains on the bounce, especially the initial one.  For better or worse, this week will begin without the adamantine clarity of 2884.00. On Friday, sellers bashed that Hidden Pivot support four times, exceeding it by more than a few points only once. It took four days to get there, so we shouldn't be surprised if the pivot provides support for at least another day or two -- or perhaps even longer, since we can't rule out the possibility the low will prove to be an important one. I seriously doubt THE low is in, however, since grave uncertainties surrounding the pandemic and its effects on the global economy will remain for the foreseeable future. Even so, we should be careful not to underestimate the power and longevity of short-squeeze rallies, since they are explicitly engineered to fool cocky shorts who reaped big gains on the way down into getting short again, this time to crush them good. _______ UPDATE (Mar 2, 10:16 p.m. EST): None of today's three big rally legs exceeded an external peak (see it here), so in that respect the biggest single-day point gain in history was, well...unimpressive. That doesn't mean I'm going to try to intercept the stampede with short offers every inch of the way to Kingdom Come. But when the futures plummet to new lows at some point, remember this tout. For now, I'll

Today's inverted swoon portends more downside to at least 3071.00, where an important low was recorded in early December.  Too many bulls are counting on it for support, and that's why it will be exceeded at least marginally. At that point the bearish pattern shown in this chart would become not just dominant but predictable, meaning we should expect a bounce, possibly tradeable, from p2=3053.84; and an even more likely  one from D=3011.44 exactly. The pattern is a little gnarly because its point 'A' is not obvious, and that's why I expect it to work for our usual purposes, particularly trading from either side of the market on the way down. _______ UPDATE (Feb 27, 8:22 a.m. EST): Tradestation's sometimes twitchy tool set appears to have done me out of an overnight opportunity. Although I was very careful drawing the pattern that yielded downside targets at, respectively, 3053.84 and 3011.84 (see above), I apparently wasn't careful enough. Here's a corrected chart that shows a p2 at 3055.63 that came a crucial inch closer to nailing the overnight low: https://bit.ly/396fSth The ostensibly small difference was enough to put the rABC I would have used (a=3091.00 at 5:00 am yesterday) to set up the trade just out of reach. Anyway, the corrected levels are: p2=3055.63 and D=3013.50. Prepare to be front-run at the latter -- yes, the algo chimpanzees seem to have learned one of my tricks -- when (not if) ES falls to it.______ UPDATE (Feb 27, 8:31 p.m.): Judging from reports in the trading Room today, many subscribers kicked butt as stocks plunged, visiting disaster on most investors. I've linked charts in The Morning Line with possible bottoming numbers in AAPL, T-Bond Yields and the Dow. Here's another for the E-Mini S&Ps, with a promising target at 2884.00.

Monday's so-far feeble bounce came from a place too obvious to trust. The low was very close to an important bottom at 3226 recorded on January 31.  Expect the futures to dip anew on Tuesday, stopping out bulls in order to make another run at recovery. I expect the attempt to fail, and therefore to be shortable before the relapse gets going in earnest. In the meantime, the most promising trade I can discern on the hourly chart would be a buy originating in the 'nowhere zone' between the two important lows shown. This is for rABC specialists only, but I will provide guidance if I'm in the Trading Room at a moment of opportunity. One additional note: Although I am not a fan of head-and-shoulder formations, a rally to around 3340 would be 'interesting' in an H&S kind of way. _______ UPDATE (Feb 25, 6:59 p.m. EST): In the Trading Room today, I referred to this chart numerous times to warn that the selling begun around mid-morning was likely to turn ugly as the day wore on. In fact, the futures fell an additional 73 points after I posted. A second alert 55 minutes after the initial warning noted that the plunge yet to come could shave an additional 900 points from the Dow. As of the close we were two thirds of the way there but looking for a bounce -- potentially tradeable -- from the 3098.25 target shown in the chart. Although a tightly stopped bid could work, my recommendation is that you attempt this only if you've profited on the way down. ______ UPDATE (Feb 26, 8:00 a.m.): The futures trampolined 53 points (!) after bottoming at 3091.00 at a ridiculous time of day (5:00 a.m.). Despite this inconvenience, numerous subscribers -- night owls, it would

Panicky sellers who dumped their positions on the opening tonight paid a very heavy price, since the thieves who control the game gave them a bid 45 points below Friday's close. This manipulation will have exhausted sellers, at least for the time being, making it easier for the thieves to unload their inventory at higher prices during the day. Even the predators will have to be careful, though, since the investment world has finally caught on to the fact that economic fallout from the coronavirus is going to be a very big deal -- even if the bug itself is eradicated tomorrow.  A quick die-off seems unlikely, but the story itself is picking up steam. It grew much scarier over the weekend, so much so that most traders are probably wondering why they didn't have the good sense to get short up to their eyeballs at the close on Friday.  Looking just ahead, the 3278.00 midpoint Hidden Pivot shown in the chart can be used as a minimum downside objective, but also to bottom-fish if you trade this vehicle actively. My gut feeling is that the selloff will reach the 3252.50 target in the next day or two, giving this week the worst start investors have experienced in long while.

Although coronavirus is still viewed as unlikely to derail the bull market, it has noticeably sapped its strength. We don't feel it so much when stocks are ratcheting blithely higher as they did last week. But when you see half of those gains erased in mere minutes as occurred this morning, it's warning us to watch out for trouble. For the moment, that means focusing on the 3380.63 midpoint resistance shown in the chart. The 13-point rally required to get it there seems likely, and I'll suggest using it as a minimum upside projection. But I will also be looking to get short there, if only for a quick scalp, since I mildly doubt that bears are nervous enough to deliver the usual short-covering panic on-demand. If they can sit back and just enjoy the news, including most recently Apple's sobering, virus-wary guidance, perhaps then the supposed Smart Money will get the comeuppance it has been courting for years.

The 3425.25 rally target shown in the chart looks potentially useful -- not only as a minimum upside objective for trading from the long side, but as place to attempt shorting either with a tight stop-loss or an rABC pattern of lesser degree. Note that the futures took a strong bounce Friday from the red line, the pattern's midpoint pivot. In retrospect, we can see that a bid there would have produced a quick gain of as much as $850 per contract. Is there a rule we can formulate that would make it easier to exploit such opportunities? Let me try, as follows: Attempt a 'mechanical' buy at the red line if an earlier pullback from our proprietary 'sweet spot' fails to come down to the green line where we typically initiate the trade.  As always, the stop-loss on such trades is equal to a third of the differential between the entry price and the D target. I should also mention that the C-D follow-through leg, or at least what exists of it so far, did not exactly blow past p=3364.38. This implies that a move to D is not quite a done deal, even if the pattern looks strong enough to get the futures there. _______ UPDATE (Feb 19, 7:12 p.m. EST): The 3425.25 target billboarded above has served us well. Here's a smaller pattern with a lesser target at 3415.00 that can be used on Thursday to improve your odds of engaging profitably with the futures, whether long or short.