E-Mini S&P

Yesterday's call here for a 500-point Dow rally may prove to have been one felicitous step ahead of the news.  With the U.S. economy headed into deepest recession, if not outright collapse, nothing makes me queasier than putting out such a bullish forecast. And yet, once again, mechanically following the discipline of the Hidden Pivot System has kept me honest and alert. Under the circumstances, there was no ignoring the fact that a bull cycle now five weeks old easily penetrated a key midpoint resistance on the E-Mini S&P's hourly chart.  Whether this portends stupid new highs for the broad averages and yet more hubris on Wall Street remains to be seen.  Whatever happens, though, we'll be ready.

What a sorry mess yesterday's "action" was. The tired pumping did not change a bigger picture that hints of at least somewhat lower prices over the near term.  However, as we learned during yesterday's weekly tutorial session, there's a reason why bears cannot afford to be complacent at these levels.  Notice in the chart that Tuesday's high decisively exceeded the midpoint resistance of a bullish pattern that has been in motion since January 30.  What this implies is that although the futures subsequently dropped like a stone, they may be plotting a thrust to new recovery highs that could catch shorts unawares.  The  target is 1373.25, implying a rally that would be equivalent to nearly 500 Dow points.

Rick’s Picks holds a short position in the QQQs, and although we should like to imagine that it will prove to have been initiated precisely at the Mother of All Bear Rally Tops, we found reasons in the hourly E-Mini S&P chart to think we may not get so lucky. We also looked closely at Gold’s charts and came away with little doubt that prices will be moving higher over the foreseeable future. Finally, and alas, a real-time futures trade on which we risked a paltry three ticks came a cropper.

So feeble were buyers yesterday that DaBoyz couldn't even short-squeeze this vehicle above the 1334.75 threshold where I'd said the rally would turn lethal for bears.  They'll have another chance today, though, since sellers have been even more feeble resisting an uptrend that has been all waft and no thrust.  The nearest Hidden Pivot lies at 1334.25, just shy of our trigger level, but I wouldn't count on it for stopping power.  In any event, we'll want to short an old target at 1356.00 if and when the futures get there, since th target (shown in the chart) remains valid. Pivoteers may notice a pair of purple coordinates that define yet another bullish possibility. Their D target is 1373.25, and so a stall at the associative midpoint, 1333.00, could have predictive value.

This one-hour demonstration from Friday (2/25) begins with a look at some key concepts related to the Hidden Pivot Method and to the “camouflage” trading technique. We then segue to real-time charts, looking for actual trading opportunities in such popular vehicles as Comex Gold, E-Mini S&Ps and the Mini-Dow during market hours.

Although sellers were their usual, timid selves on Friday, the action was bearish from a Hidden Pivot standpoint nonetheless because all of it took place beneath some not-very-challenging peaks recorded two days earlier.  Mild price weakness has emerged Sunday night, but so far, with the futures off just five points, it seems more like the kind of selling that bulls engineer for their benefit rather than fearful selling. In any event, the nearest target at our disposal for a minimum downside objective is 1292.00, the midpoint support shown in the accompanying chart. A decisive penetration of that number would portend 1278.00, which can be bottom-fished with a stop-loss as tight as 1.00 point. _______ UPDATE (9:33 a.m. EST): DaBoyz have kicked off a new week with the by-now familiar Monday morning short-squeeze. Based on no-news-is-bad news, it'll turn lethal above 1334.75.

Bears turned in an underwhelming performance yesterday,  letting bulls mop the floor with them after they'd succeeded briefly in pushing the Dow 120 points lower.  I found myself wondering aloud during yesterday's impromptu trading-room session whether only a black swan event could cause the selling to snowball.  Still, the impulse leg generated so far looks fairly impressive on the daily chart, and it may have even further to go, since there has not yet been a b-c correction to end it. (That would occur today on a print of 1311.00 or higher.)  Traders can try bottom-fishing at 1274.50, stop 1273.75 (!) provided the 1311.50 Point 'C' of the pattern has not been exceeded to the upside.  Buyers would put bears seriously on the ropes today if they can squeeze this vehicle above 1320.50.

The downtrend is now impulsive on the daily chart, having taken out a second "external" low at 1308.50 with yesterday's moderate decline. The move will now either accelerate -- or recoup the losses before bears know what's hit them.  My gut feeling is that the former is about to occur, a Hidden Pivot feat that would become serious with a print this week or early next below the 1262.25 bottom recorded on January 31 during a nasty swoon. Alternatively, buyers need only push this vehicle above 1334.50 today to reclaim the advantage.  The significance of that number is shown in the accompanying chart.

Yeah, okay, so I'm smacking my lips because yesterday's selloff has come from a high that lay within 13 points of a major, major Hidden Pivot target. Even so, I've warned in today's E-Mini S&P tout not to turn our backs for even a minute, since the nastiest bear rally of them all may have yet a trick or two to play on anyone who thinks it will be easy to make money if the S&Ps are about to fall by half.