E-Mini S&P

Yesterday's monster rally fell just shy of the 1240.00 target I disseminated in a morning update, but if the futures break loose today and close above it, that would augur more upside to as high as 1284.25 (aka 'D') over the near term. Our trading bias would be aggressively bullish above 1240.00, but camouflage opportunities derived from the hourly chart may be limited. At present, the best of them would seem to lie in the 1233.75 peak highlighted in the chart. A 'b-c' pullback from a few ticks above it would offer a buying opportunity that shouldn't be passed up if the standard 'camo' conditions are met. I've sketched this out hypothetically for your further guidance and will provide a tracking position if things play out more or less as imagined. _______ UPDATE (10:08 a.m.EST):  There were no subtle camouflage opportunities such as the one I'd drawn, since DaBoyz greedily squeezed shorts for all they were worth overnight, creating a too-obvious impulse leg in the process. It is still valid, by the way (60m, A=1195.50 on 12/19, and B=1249.00, C=?), so bears shouldn't get their hopes too high merely because stocks are falling this morning.  A 13.50-point upthrust now from anywhere north of 1215.50 should be viewed as the possible start of a much bigger move with 40 points of additional potential. Camouflageurs should plan accordingly.

Someone in the chat room appears to have filled a bid down around 1196.50, a Hidden Pivot highlighted during Monday's impromptu online session. Although I'm not going to track the position because the trend is too well developed, perhaps we can try to get short when buyers run out of steam.  We haven't done much of this, mainly because it's been easier to nail swing lows that go against the trend in a presumptive bear market.  For starters, let's use the point 'X' of the downtrending pattern shown to get aboard. Entry will need to be via camouflage, though, since the implied theoretical risk here is about 2.50 points, or $125.  As I explained during yesterday morning's sessions, we want to "do" the trade in whatever time frame yields a downtrending abc pattern with no more than five ticks ($62) of entry risk from point 'X'.  I'll establish a tracking position for your further guidance if there's an entry signal that meets all of our criteria. _______ UPDATE (10:02 a.m. EST): Today's wicked upthrust has caught shorts with their pants down. The proximal cause of this squeeze is an apparently successful auction of Spanish debt and an uptick in housing construction.  Interestingly, the uptick is mainly in multifamily apartments, implying that the powerful bull market in residential rentals is starting to heat up -- to get legs, even.  Technically speaking, the short squeeze is bullishly impulsive on the hourly chart and could go all the way to 1240.00 before hitting a Hidden Pivot impediment (A=1177.25 on November 30, B=1266.00 on December 8 = 1240.00 ‘p’).

It’s getting a bit late for a Santa rally, but you can’t blame DaBoyz for trying – trying every night, actually, after most U.S. traders have gone to bed and there are almost no sellers to resist the stock market’s natural buoyancy in a time of unprecedented monetary easing.  We’ve lost track of how many times in the last month index futures hit their highs in the wee hours, only to fall into the red during the regular trading session. It happened yet again Sunday night when the E-Mini S&Ps wafted the equivalent of 90 Dow points higher on volume-less trading before dropping sharply to close off a hundred points. We’d held a long position in the March futures going into the weekend, and although the position showed a paper gain of $600 when we exited on a stop at 1210.75 Monday morning, we bailed out well off the overnight highs. This wouldn’t be the first time we got long with an ultra tight stop-loss using the Hidden Pivot “camouflage” technique, nor would it be the first time that the uptrend we boarded went nowhere.  Catching the occasional big wave is always our intention when we do “camo” trades, but given the choppy, go-nowhere, do-nothing price action in recent months, we’ve had to adjust our “long-term” horizon downward not to months, weeks, or days, but to hours. Santa’s Influence Nil Concerning Santa’s seasonal influence on Wall Street’s otherwise pointless, algorithm-driven histrionics, news from Europe has overshadowed so-so reports on holiday retail sales in the U.S. The last such report suggested that many shoppers had finished early this year and that there would not be much good news coming down the home stretch. Such “facts” seem impossible to determine, though, since it would require exit polls at the malls to say

We are long a single contract with a cost basis of 1156.00. The 17-point drop from Friday's high missed our 1207.75 stop-loss by two ticks, but be prepared to exit on that number Sunday night. That would give us a gain worth a little more than $2500 on paper.  ______ UPDATE (7:29 p.m. EST): The futures touched the stop moments ago, so we'll move to the sidelines. It's always hard to tell about these Sunday night shakedowns, but we'll avoid this one since both 'p' (1206.00 ) and 'D' 1197.75 coincide with previous lows that are likely to entice the riff-raff into bottom-fishing.  However, if the futures get away from the dirtballs who are maneuvering them lower at this moment, they could plummet to 1179.00. That's a Hidden Pivot you can bottom-fish either with camouflage or an 1179.25 bid, stop 1178.25.  Its 'p' sibling lies at 1202.00, but bidding there is suggested only for those able to employ camouflage. If an order fills there via a picture perfect 'camo' reversal, I'll establish a tracking position of four contracts for your further guidance. _______ FURTHER GUIDANCE (11:12 a.m. EST): We initiated a long position at 1206.00 following a perfect 'camo' pattern off an overnight bottom at 1201.75. On the 10-minute chart, the abc coordinates -- all single-bar! -- lay, respectively, at 1201.75, 1207.75 and 1204.50.  Two contracts were to have been exited at the 1207.50 'p' midpoint, and a third at d=1210.50. This gave us a profit-adjusted cost basis of 1198.50 for the contract that remained. It was exited minutes ago at 1210.75, based on the bearish impulse leg created via a dip beneath the 1211.00 'external' low recorded on the way up at 4:10 a.m. Our theoretical paper profit for each four-lot entered was $600. It would seem that in

Does the chart below of the Dow Industrial Average make you feel bullish? Bearish? Neutral?  We’re not sure ourselves. Although we’ve been using technical analysis for nearly 40 years, the chart doesn’t speak to us. At best, it leaves us with only a moderately bullish bias for the near term  -- and a vague feeling that the meaningless price swings that have ruled the markets in 2011 could continue for longer than we would care to imagine, let alone explain  This is hard to believe, especially with so many dreadnoughts bearing down on the global economy and banking system. The U.S. is re-entering a recession that never ended for most households. China has hit the brakes in preparation for a slowdown in global trade, and the country’s real estate bubble appears to be deflating with a vengeance. Jihadists are planning naval “maneuvers” in the Strait of Hormuz. Bird flu and the bubbling Yellowstone caldera threaten us with extinction. And there is of course Europe, faced with the impossible choice of either monetizing the debts of countries that will never be able to pay them, or letting those countries go bankrupt. We think it is the latter option that will forced on decision-makers, since rich-uncle Germany understands that throwing another two or three trillion euros of debt-money at the problem will not fix it.  In any event, the decision cannot be delayed for much longer, since interest rates for sovereign borrowers are becoming increasingly uppity. For Italy, most crucially, rates are edging back toward 7% -- the extreme end of the red zone politically and economically – within days of each new phony bailout scheme hatched in Belgium. A disaster is coming, and it is only a question of when. Like a Kite in a Gale And yet, U.S. stocks continue

We hold two open positions, one a partial butterfly spread that will give us some riskless leverage on a rally into year's end if we can complete it with stocks sharply on-the-rise.  Late Thursday night, index futures were up, but not by enough to suggest that DaScumballs were fixing to pull out the rug. It looks more like they are trying to restrain buyers, actually, with the goal of short-squeezing the opening on whatever news they've been told is coming.  _______ UPDATE (4:01 a.m. EST):  Overnight action has gifted us with a long trade in Feb Gold that is still "live," and a profit-taking opportunity a single tick from our target and two ticks off the so-far high in the E-Mini S&P.  Check out my updates for further, detailed trading guidance.

We hold two contracts with an 1178.00 cost basis that has been adjusted to reflect paper gains on half the position already exited. Continue to use a stop-loss at 1205.75, but close out one of the contracts if 1222.00 is reached first. (Note: This is lower than the number originally given.)  If the order fills, stop yourself out of the single contract that would remain if the futures create a bearish impulse leg on the 30-minute chart.  As we went to press Thursday night, the futures appeared bound for a Hidden Pivot at 1222.25, predicated on a decisive push through the 1215.00 midpoint sibling of that number. If 1222.25 is exceeded by more than four ticks, however, it would portend more upside on Friday to as high as 1230.25. _______ UPDATE (3:56 a.m. EST):  We exited a third contract two ticks off the so-far overnight high, dodging a subsequent 6.50-point pullback in the process, when the futures spiked to exactly 1222.50 at around 2:25 a.m. Imputing theoretical gains so far to our remaining contract gives it a cost basis of 1156.00. At a current price of 1218.50, that implies a paper gain so far of $3100 per contract. Set a 1207.75 stop-loss for now, but switch to a 4.00-point trailing stop above 1227.00

Visually obscure subtleties are what we look for during these Wednesday sessions, since they are our most useful tool in identifying trading opportunities that will subject us to relatively little risk or stress. We found some excellent examples during this session while stalking possible trades in the E-Mini S&P and February Gold. We also got a chance to ponder a potentially tradable low in the QQQs just moments after we had “locked in” a nearly riskless vertical bear spread by shorting some January 51 puts against January 54 puts we had bought earlier.

We doted on the 1198.00 target during yesterday's tutorial session, licking our chops at the prospect of getting in at a trampoline bottom. Alas, fatigued sellers were unable to push this pup any lower than 1202.50.  The downside target is still valid, as is another less promising one at 1199.75, but bottom-fishing is recommended only for those who are camouflage-equipped. If you're not but desperate to do something, anything, you can try bidding 1195.25 with a 1.00-point stop-loss.  That's the lowest target I can extrapolate from the 15-minute chart (see inset). _______ UPDATE (9:17 a.m. EST): I'm establishing a tracking position, since the 1198.00 target nailed the exact low of this so-far 20-point rally. Also, a couple of chat-roomers who work the graveyard shift evidently initiated positions at the low. Assuming four contracts purchased, cash out half of them here for around 1218.00.  That will give us an effective cost basis of 1178.00 for the two contracts that remain. Tie them to a 1205.75 stop-loss for now, o-c-o with an order to sell one contract at 1226.00. Hitting the low to the exact tick was a simple parlor trick that you can learn in a month. Click here if you think you're ready to try.