E-Mini S&P

Assuming index futures continue higher on Tuesday, I've laid out a strategy for getting short at the expected top but have also suggested catching a ride north as prelude, since there was potentially 26 points of upside for the E-Mini S&Ps.

A particularly slow day in a seemingly interminable stretch of slow weeks allowed us to focus on some subtle technical points that might otherwise have gone unremarked. On the technical premise of a strong dollar, we scrutinized the euro’s charts, which paradoxically looked strong but which on further inspection revealed some small but possibly significant signs of weakness. We then shifted our attention to the E-Mini S&P charts, turning them inside out to ferret out a tradable nuance. So that you can share in the suspense we felt poring over the charts, I’ll leave the outcome undivulged.

So comfortable had I become with the stock market's daily, thrusting assaults on rationality that I neglected to consider even the possibility of a decline, especially one so refreshingly nasty as what we saw yesterday.  My good friend Doug B, The Savviest Financial Advisor I Know (the number two guy on the list is not even close, by the way) thinks this is the beginning of a devastating correction that will bring valuations more realistically in-line with an economy that we both agree is headed into a full-blown Depression. While he has logic on his side, and even some contrarian boost from the hordes of advisors he insists are too, too bullish these days, I'm going to fall back on technical analysis alone to tell me what might come next. So check out today's touts for the E-Mini S&Ps and the Dow if you're interested in a closely reasoned look at the charts using Hidden Pivot Analysis. Incidentally, I'll be taking a look at the technical runes in real time later this week. Details will follow shortly, but this will be an online analysis session open to all and to which you can invite your friends.

With Thursday's touts, I haven't gone very far out on a limb, but there's room nonetheless for a bullish play in the E-Mini S&Ps if traders remain intoxicated with the bullish "story" on Greece et al. Not that every one of them doesn't know it's going to end badly; just that each is acting as though he will be just ahead of the panic when it hits.

When I ascribe negative traits to trading vehicles such as the E-Mini S&Ps, it is for good reason. For in fact, when the little monster moves wildly up and down, sideways, or sometimes barely at all; and when it gallops a mile just to hit "your" stop-loss, it is in fact doing the instantaneous bidding of a thousand wild-eyed traders, each attempting to second-, third- and fourth-guess all others in the game at every moment. During this tutorial session, we examined this propensity of stocks, commodities and index futures to move as though they were out to cripple and maim anyone who would seek to make "easy money". Enjoy!

There was little to excite early Tuesday evening, although night owls with a deft touch may be able to exploit a small, bullish pattern that was developing in the E-Mini S&Ps.  There were subtleties in Silver that might also yield opportunity, although I haven't explicitly advised a trade.

Shortly after 1 a.m. EDT, Gold was up and index futures were down, but it would hardly be shocking if both trends were to reverse before trading begins in New York.  I've provided downside targets in bullion but none for the E-Mini S&Ps, which have become almost too boring to watch.

I'm waving a yellow flag in today's bullion touts, since downside targets given here yesterday remain in effect.  The same could be said of the E-Mini S&Ps, which, Lord willing, will provide us with a fabulous, doomed rally to get short.

Index futures were getting pounded in the wee hours Monday, unable to resist the onslaught of selling that has sent Asian markets reeling.  Structural support for the E-Mini S&Ps lay just beneath the so-far low at 1135.75 in the form of a prior low at 1130.50 recorded a week ago, but if it gives way a robustly bearish impulse leg would form on the daily chart.