E-Mini S&P

The rally would need to continue for at least a couple more days before it becomes mildly persuasive.  I'd suggest setting an alert at 2899.50, since that would generate a robustly bullish impulse leg on the hourly chart. Although I recommended a mechanical buy on Monday at 2821.25, only a couple of subscribers reported doing the trade, one of them by substituting SPY options. I'm not going to establish tracking guidance for this position, although I will continue to provide informal updates here and in the Trading Room. There was $4750 per contract at risk initially, and that's why I suggested paper trading this one. To the extent it works, it should increase your confidence in 'mechanical' trades while diminishing your reluctance to pull the trigger on one.  In the meantime, I've advised subscribers who were in the trade to take half of the position off near 2838, for a theoretical gain of about $850 per contract.  The swing-for-the-fences target is 2910, or possibly even 2995. At the higher number, a two-contract position would show a theoretical profit of about $18,000. _____ UPDATE (May 16, 4:06 p.m.): Buyers narrowly missed our bullish benchmark at 2899.50, but they are likely to try again as the week draws to a close. The 'mechanical' long position is still live, and I'll now recommend exiting one of the two contracts that remain at 2917.75. ______ UPDATE (May 19, 10:16 p.m.): Exit another contract at current levels, around  2868.50, for an additional theoretical gain of around $1500. The futures feel leaden, so we should stick with 2899.50 as a bullish benchmark. _______ UPDATE (May 21, 9:03 p.m.): Zzzzzzzz. _______ UPDATE (May 23, 8:32 a.m.): Index futures have gotten pummeled overnight. This one should continue falling to at least 2815.75 before reversing. Here's the chart. _______

If last week's tortuous, ratcheting downtrend is the best that sellers can do with a collapse in trade talks to help them, then we should take Friday's bullish finishing stroke as a valid 'buy' signal. I'd written here earlier that a failure to produce an agreement between the U.S. and China would not be bearish for stocks, but instead prove to be a case of sell the rumor, buy the news. If this is so, and barring the always-possible Sunday night surprise, we should see the futures push above p=2910.75 (click on inset) on Monday or Tuesday. A subsequent pullback to the green line from our sweet spot between p=2901 and p2=2953 would trip a 'mechanical' buy signal. _______ UPDATE (May 13, 6:35 a.m. ET): Overnight, the futures have given up two-thirds of the very substantial gain they achieved via Friday's explosive short squeeze. If DaBoyz have to take the futures down by 40 points just to dry up sellers this morning, stocks are in worse shape than I'd thought. The rallies have become almost too scary to short, but also too fleeting to distribute. That's dangerous. Our best bet -- effectively against sanity, and still reasonably priced -- is VXX calls. _______ UPDATE (May 13, 11:23 a.m.):  The buy triggered at 2821.81. The implied initial risk per contract, using a 2726.00 stop-loss, is $4750 per contract, or $19,000 for a four-contract position. Best to paper trade this one to see if it works. If so, it should add to your confidence in mechanical trades in general. _______ UPDATE (May 14, 10:48 a.m.): If you took a position with real money as some subscribers appear to have done, book profits on half near 2838 -- $850 per contract at the moment -- and use a break-even stop-loss for what remains.

Sellers exceeded the 2865.75 downside target shown, implying they are not yet done. The overshoot was just 3.25 points, but that's sufficient for us to infer that the rally is corrective and therefore, at some level below 2938.25, an opportune short sale. Granted, there's room to raise the point 'A' high a tad to produce a lower 'D' that would have precisely contained the selloff. But the one I've used is too clear and compelling to ignore, and that's why I am relying on it to give me an accurate read on the dominant trend. Alternatively, however, and just in case, a thrust above C=2938.25 would be warning bears to dive for cover. _______ UPDATE (May 9, 8:06 a.m.): Weakness overnight has put a 2831.50 target in play. There's potential for a 'mechanical short' to materialize if the futures rally to x=2882.50 (stop 2900.00). Here's the chart. _______ UPDATE (May 9, 2:21 p.m.): The relapse amounted to a very nasty 50 points. Shorts panicking to get 'em back have reversed the selloff from 2836.25, five points shy of my target, recouping 70% of the day's losses so far. I am skeptical about this rally but would become a (temporary) true believer again if it hits 2930.75. This is a tick above an interesting 'external' peak on the hourly chart.  

Remember: However nutty price action gets, it's all just impulse legs. Two tariff-related downdrafts within the last 24 hours have produced the tradeable pattern shown (click on inset). There are two ways you can play it: 1) bottom-fish at p=2905.25 with a bid a tick above that midpoint Hidden Pivot, stop 2903.75; or 2) get short at the green line 'mechanically' if the trade sets up exactly as shown. You'll be on your own if either order fills, but you should take a partial profit on half the mechanical short if it falls to the red line at 2905.25.

The futures trampolined last week from 1.00 point above 2900.00, a round number whose psychological importance seems obvious in retrospect. They are bound now for the 2972.75 target shown in the chart (click on inset) and should have little difficulty getting there, judging from the way buyers blew past the midpoint pivot at 2937.00. Now, a pullback from the green line from no higher than 2949.50 should be used as a mechanical  buying opportunity, stop 2900.75. ______ UPDATE (May 5, 6:21 p.m.): None of us imagined there was still bad tariff news out there to disrupt the markets, but that is exactly what has happened this evening with a bellicose tweet from Trump. This too shall pass, but the slimeballs who work the markets on Sunday evenings have taken the E-Mini S&Ps down 54 points so far in order to make certain that any buying they have to do is sufficiently discounted to turn a profit on Armageddon. There's a Hidden Pivot support at 2894.50 that is working thus far to contain the fraudulent air pocket, but I wouldn't lean on it too heavily._______ UPDATE (May 6, 12:15 pm.): The fraudulent air pocket seems just a tad overdone at these levels, but if it snowballs, the futures could fall all the way to 2800 to pick up 'structural' support from some key lows recorded there in late March. The resurgent tariff war and a shooting war between Israel and Hamas that is threatening to go out of control are providing a double whammy, but it's impossible to estimate how much of a bounce stocks would get if there's a cease-fire agreement overnight.

The bull market has gone vertical, suggesting stocks are in a blowoff. Where will it end?  We'll hazard a guess simply because it's irresistible fun, and because one of these days we're bound to get it right. Let me therefore offer 2953.50 for the June contract, or 2974.25 if any higher. Both of these Hidden Pivots seem likely to show stopping power, even if equally compelling rally targets got bulldozed on Tuesday.  The lower number is especially appealing because of the precise stall at the midpoint pivot with which it is associated (see inset), and the perfection of the 'mechanical' buy signal 40 points below these levels a week ago. ______ UPDATE (May 2, 9:58 p.m. ET): A just-missed rally target at 2969.50 was an important enough failure to imply a small chance that a major top is in. I mentioned this target earlier but did not drum-roll it because I did not want to queer its usefulness as a place to get short. For now, though, use the 2892.20 target shown in this chart as a minimum downside projection. An overshoot could be telegraphing an acceleration of the downtrend.

The bull market has gone vertical, suggesting stocks are in a blowoff phase. Where will it end?  We'll hazard a guess simply because it's irresistible fun, and because one of these days we're going to get it right. Let me therefore offer 2953.50 for the June contract, or 2974.25 if any higher. Both seem likely to show stopping power, even if equally compelling rally targets got bulldozed on Tuesday.  The lower number is especially appealing because of the precise stall at the midpoint Hidden Pivot with which it is associated (see inset), and the perfection of a 'mechanical' buy signal 40 points below these levels a week ago. ______ UPDATE (Apr 28, 2019): A very major, 3095 target for the cash S&P Index introduced in today's The Morning Line sits above these targets, although it hasn't pre-empted them. How much stopping power they show remains to be seen. _______ UPDATE (May 1, 10:09 p.m.): Let's ignore today's freakish reaction to non-news from the Fed. It was not bearishly impulsive, although a print today at 2914.00 would change that in a small way.

A 2929.00 rally target disseminated here a while back remains in force despite Wednesday's plunge into an air pocket. The futures had climbed steadily overnight, only to give it all back and then some in less than an hour when health insurance stocks came under heavy selling pressure. The biggest of them, UnitedHealth Group, the second most heavily weighted stock in the Dow, plummeted 7% in a blink as Crazy Bernie talked up Medicare-for-All. Although he is certain to persist as an irritant, it's unlikely to affect the broad averages for more than a few days, if that long. Meanwhile, even though the 2929.00 target still looks like a lock-up, that doesn't make it any easier to profit by trading with the uptrend. The chart shows how a lesser target at 2924.50 was missed by an inch, denying Rick's Picks subscribers a chance to get short with risk tightly under control. Assuming the futures reverse and continue higher, it won't be much easier to get long for the ride.  Buy-and-hold positions are simply not possible when marginally higher daily peaks are separated by 20-point dives.

A longstanding rally target at 2929.00 has served  us well, keeping us confidently on the right side of the trend. It now looks extremely likely to be reached, but the question is whether it will be decisively exceeded. I expect the Hidden Pivot to show stopping power, probably tradeably so, but I would recommend going short there only if you have made at least 3-4 points of profit on the way up.  You'll need all of it to provide an ample stop-loss on entry. I say this because the C-D rally leg begun on March 25 provided no opportunities to get long 'mechanically'. This attests to the power of the move, and it raises the odds of a thrust to even higher levels regardless of whether a correction is needed first to get a running start. Even a slight breach of 2929.00 would make a run-up to new record highs all but inevitable. That would not negate my skepticism that the powerful move begun on December 26 has been a bear rally. Too many agree with this judgment, however, to make a move to new highs an easy short.