The feisty, 50-point bounce off Tuesday's fear-stricken lows allowed subscribers who followed the simple 'counterintuitive' buying strategy sent out Tuesday evening to book profits of as much as $4200 Wednesday morning on a four-contract position. The futures ended the day above the 3103.00 midpoint Hidden Pivot, implying they are likely to reach the 'reverse ABC' pattern's 3136.25 target at least. If this Hidden Pivot resistance is easily breached, or if the December contract close above it, that would portend a test of the all-time high recorded last week at 3158.00 and, presumably, a decisive move past it.
I didn't contemplate putting out a bullish trade in this vehicle when I sat down late Tuesday night to update touts for Wednesday, but there it was, hanging like ripe fruit from a low branch: a textbook 'counterintuitive' buy signal at the green line (3093.25), stop 3069.25. The trade is predicated on a rally to at least p=3117.00, and I am unable to find anything seriously wrong with the pattern itself. Even the position of the point 'C' low in relation to the cliffhanger 'A' is heavy on fear factor -- the key ingredient of the CI set-up. Entry risk could be reduced a tad by converting this to an rABC trade where A= 3097.75 (11/22 at 10:30 a.m.), but please note that this gambit is already live as of 3:00 p.m.
Monday's dive was a sample of what we should expect when the still hibernating bear finally emerges. Mr Market not only delivered a swift kick in the balls, he did it while we were sleeping. I'd sent out a 3160.25 rally target last week and stuck to it even after a rally died just five points shy of it. Lo, short-covering bears got second wind Monday morning, pushing this gas-bag to a 3158.00 top that would have been easily shortable using an rABC set-up. Trouble is, the high occurred at 4 a.m. when most of us were sleeping. We shouldn't hope for great opportunities to come at convenient hours, because that's not how the game works. But we will need to be aggressive if we are going to seize whatever crumbs come our way. For now, I have no new targets to offer, nor even a confident sense of where the futures might be headed next. _______ UPDATE Dec 3, 7:55 a.m. EST): The opening is nearly 90 minutes away, but the futures are not getting much bounce off the gnarly Hidden Pivot pattern shown here, with a 'D' target at 3098.75. This is not a healthy sign. DaScumballs will valiantly keep trying to exhaust sellers, groping for a bottom in order to short squeeze the opening. We shouldn't bet against their success at rigging the game in this way, but it behooves us to treat whatever rally is coming with care and skepticism.
The 3160.25 rally target we've been using to keep us properly bullish remains to be achieved. Even though Wednesday's push to 3155.00 came close, it wasn't as close as we should expect, given the way buyers took out the 3125.50 midpoint resistance earlier in the week. All that aside, the futures are trading above a major trendline after impaling it last week, presumably adding to the euphoria, so extra caution is warranted. That means monitoring price action at 3138.00 for now, a minor Hidden Pivot support that should be expected to produce a tradeable bounce (15-minute, a=1555.00 at 6:15 pm. EST on 11/27). A 3138.25 bid for a single contract, stop 3136.25, is suggested. You'll be on your own if the order fills. _______ UPDATE (Dec 1, 11:31 p.m.): Cancel the bid, since the futures have rocketed skyward after having gone no lower than 3139.50. _______ UPDATE (Dec 2, 10:14 a.m.): And now stocks are plummeting. It would appear that 'trade hopes' have faded just a smidgen this morning.
I've presented the 3147.50 target shown in the chart as a challenge to bulls, but based on ten years of price history, we shouldn't doubt that they will make short work of it. I would nonetheless encourage you to consider rABC shorts that utilize the target, provided you know what you are doing. If the trade sets up and triggers in the wee hours, it will enjoy good odds of at least a small payoff; after the opening bell, perhaps not so much. An easy move past 3147.50 would put in play a 3160.25 target, calculated by sliding the point 'A' low down to Nov 6's 3063.00 bottom. _______ UPDATE (Nov 29): The rABC trade triggered around 6:30 a.m. Wednesday at 1348.25, producing a theoretical gain of $100 to $400 per contract, depending on whether you covered the short at p or d. The futures subsequently went nowhere after breaking above the intraday high (aka our point 'C' high). They were continuing to screw the pooch on a very dead Friday.
Bulls failed to get anything going on Friday, but so did bears. My hunch is that the latter were too timid to assert themselves as the week ended, but that they will be more aggressive come Monday. Even so, the holiday-shortened week could impede the momentum of any selloff that might develop, so permabears shouldn't get their hopes too high. Alternatively, if the December contract pushes above p=3115.38 in the chart shown, assume it's on its way to 3140.0o. Pivoteers should be alert to the possible buying opportunity that would come on a pullback to the green line in the early going, stop 3090.50, from a peak somewhere in the range 3120.50 - 3123.00. _______ UPDATE (Nov 25, 7:45 p.m. EST): A short-covering panic on the opening gapped the futures past the 3115.38 resistance noted above, all but guaranteeing more upside to the 3140.00 target. It looks too clear and compelling to be a pushover, but bears had better dive for cover if it is easily exceeded. Short there calmly with a 1.25-point stop-loss, but only if you've caught at least six points of the rally. (It wasn't possible to get long 'mechanically' as I'd suggested, by the way, because the futures did not pull back even to the red line, let alone to the green one where most mechanical trades originate.)
The futures topped three ticks from a Hidden Pivot target I'd been drum-rolling here for nearly two weeks. 'Drum-rolling' would be an understatement, actually, since it was more like a public relations campaign to drive subscribers' attention to a trade that promised to effortlessly produce a low-risk winner. And so it did, even if only one subscribers -- 'Bachus' in the chat room -- reported taking action. Bachus has a very impressive track record -- not only for turning my price targets into quick cash, but for doing so with enough street smarts and brio to improve on what I've advised. Also, he often shares winning trades in a timely manner that would allow anyone in the room to follow his lead. In this case, Bachus used a corrective ABC pattern of his own to exit the position, covering the short (or at least a portion of it) exactly 1.00 point off the intraday low. Nice shootin', dude! The trade was worth $800, and it was as close to a sure thing as any you will find on the daily list of touts. If you did the trade, please do mention it in the chat room. I've marked it as "Open" for purposes of establishing a tracking position -- that's what that little plus sign (+) next to the symbol ESZ19 means -- but if no one else actually did the trade, it will be removed. If you passed it up in hopes of shorting my DIA target with put options, you're on your own, since no one in the Trading Room expressed any interest in the symbol. Despite today's bullseye, the question remains as to whether the 3128.50 target caught a major top. This was a logical place for one to occur, and that's why anyone who got short
The Morning Line commentary for today references a 3107 trendline target for this vehicle, but we may be able to come up with a more precise top using Hidden Pivots. The trendline connects two peaks, but with an alternative second peak that would raise the trendline shown by about six points to around 3113. It is rising with a slope of about $3 per day. Now here's where the analysis gets interesting. The Hidden Pivot chart (see inset) projects a target at 3128.50 that has been validated by today's precise pullback from p=3097.75. This implies that if and when the futures close above p, or trade more than a few points above it intraday, they will become a good bet to reach 3128.50 exactly. If it happens on Wednesday, that would be in nearly perfect alignment with the trendline. ______ UPDATE (Nov 13, 4:20 p.m.): The trendline will come in Thursday at around 3121, which is certainly not out of reach. Be ready to get short there, but if you'd prefer to buy put options instead, use 311.80 as a target in DIA. It is tied to the same trendline. _______ UPDATE (Nov 14, 8:05 p.m.): The trendline will come in at around 3125.00 on Friday. Putting the DIA trendline target aside, there's a Hidden Pivot target at 280.88 that you could short with a very tight stop-loss. Here's the chart.
So when is Mr. Market going to wipe the stupid grin from bulls' faces? Soon, would be my guess. Check out the trendline in the chart. A pisher it ain't. It connects the peaks of two major rallies and goes back more than seven months. And here are two more trendlines that are arguably even more daunting. The first shows the New York Composite Index (NYA) and comes from Peter Eliades. It first appeared here more than a month ago. The second shows the Industrial Average. If these trendlines fail to stop the bullish wilding spree dead in its tracks, then technical analysis is just toad entrails and tea leaves. All three resistance points lie not far above current levels, implying that the manic rally in U.S. stocks could continue into next week. 'Freaky Friday' is not usually a reversal day, so we should brace for more of the same, at least for now. _______ UPDATE (Nov 7, 10:19 p.m.): DJIA popped through its respective trendline like it wasn't there, hitting a high nearly 200 points above it before settling at the midpoint of the day's range. This is quite impressive, and there is no denying it is very bullish. Let's see how NYA and the E-Mini S&Ps (see below) do.
So-far moderate selling in after-hours trading stalled precisely at p=3070.75, but we should look for a move down to at least d=3063.50 if that Hidden Pivot midpoint support gives way. If you want to bottom-fish against the trend, a stop-loss as tight as 3062.75 should suffice. My bias remains bullish due to the 10-point overshoot of a 3075.75 rally target drum-rolled here earlier. The target was sufficiently clear and compelling that it should have repelled buyers, and precisely so. The fact that it didn't is evidence that they are still out there, eager to jump aboard but in need of a breather. Let's see whether a fall to d=3063.50 provides one. If it gets trashed, that would shift the minor trend to bearish. ______ UPDATE (Nov 6, 11:01 p.m.): The futures rallied 15 points after bottoming at 3063.00, two ticks below the target furnished above. The move was worth as much as $750 contract, but only one subscriber has reported acting on it so far.
