E-Mini S&P

We're using  a midpoint pivot at 1098.75 as a minimum downside objective. It comes from the intraday charts and proceeds from a one-off A=1208 (April 30) as the starting point.  The support looks too valuable and tradable to risk wasting with a micro-tight stop-loss, so we should try to get long using camouflage.  In practice this will mean zooming in on the lesser charts if and when the futures reach 1101.00 or so. Thereafter, any valid impulse leg on the 3-minute chart or less should be used for aggressive buying with the penny-ante stop-loss that would apply. Anyone still short from above, when the target was first broached, should continue to scale in contracts or use a dynamic trailing stop.  _______ UPDATE (2:28 a.m. EDT):  The futures were trying to consolidate after selling off the equivalent of about 120 Dow points. This will make camouflage buying near 1098.75 the only way to go if you attempt to bottom-fish, since the tempo of the selling may have increased significantly by then.  Anything below 1098.75 would yield a new short-term target at 1088.00, equivalent to about 400 Dow points.

Take a look at the chart and see if you don't feel the weight of the nascent correction as well as the magnetic pull of the indicated midpoint support at 1098.75.  The picture could change with a rally above the existing point 'C', but for now, I'm banking on a correction down to at least 1098.75.  That would be equivalent to more than 300 Dow points, so we should look for low-risk opportunities to surf the trend early in its development.  Specifically, I'd suggest focusing on the 3-minute chart, using bearish impulse legs that follow uptrending failures to reach their targets. ______ UPDATE (11:54 a.m. EDT):  The futures have indeed plunged, tallying losses so far this morning that are equal to a little more than half of what had been predicted.  The 1098.75 midpoint support remains valid and should be viewed as a good place to attempt some aggressive, tightly stopped buying.  Shorts from last night's highs should be scaled in with the 1098.75 objective in mind.

The 1170.25 rally target that we've been using is obviously still on this vehicle's reptilian brain, and now it has been surpassed by 1.00 point. That's not quite enough to get it by the 1173.25 benchmark we set yesterday, but if it happens this morning it would create a bullish impulse leg on the hourly chart that  we could not ignore.  However, lest we be bamboozled by a head-fake, let's ratchet the bar up slightly to 1175.25, which takes into account the 1175.00 peak-let show in the chart.  A point 'B' high that forms between those two numbers would offer great camouflage and the possibility of a trade like the one I've sketched.  On any kind of rally, my minimum upside target will be 1181.00. _______ UPDATE (1:17 p.m. EDT):  Our look-to-the-left peak at 1175.00 did its job beautifully, since we were not fooled when this sneaky little sonofabitch tiptoed up to exactly 1174.75 before going into a 13-point selloff.  The analysis remains valid, as does the crucial importance of 1175.00 to the short-term picture.

The futures have sold off nearly 30 points after peaking less than two points from an important Hidden Pivot target at 1170.25.  I did not suggest shorting there because the target seemed too obvious, coming as it did from an impulse leg drawn from last Thursday's low (where B=1136.00).  We should respect this selloff, since the recent peak has the potential to become a major top.  Further evidence of this would come on a print today below 1142.75, a minor midpoint support that comes from the 15m chart (A=1158.50).  If it's breached by more than two or three ticks, expect the selling to continue down to at least 1134.75.  That's a Hidden Pivot, and you could bottom-fish there with a stop-loss as tight as 1.00 point. ______ UPDATE (10:42 a.m. EDT):  The futures have bounced 25 points from a so-far low of 1141.00.  This is a hair more than the three-tick breach that I'd said woul8 decisively breach the pivot, but it is clear in retrospect that the hoi-polloi were focused, simply, on Monday's 1140.50 bottom as structural support.  The rally lacks real power and would need to hit a minimum 1173.25 to impulse on the hourly chart -- a feat that looks like an even-odds bet for today at this moment.  Even so, the strength of the rally, such as it is, comes as a bit of a surprise, since skepticism toward the latest, trillion-dollar bailout, seems to be nearly universal  (i.e., everywhere but on CNBC).

Friday's wilding spree didn't quite reach the nakedly ambitious target at 1170.75 that I'd said would max out the move, so it's still valid.  Above it is a new target at 1205.25 that came into focus as a result of yesterday's price action.  It is tied to an 1174.75 midpoint that hasn't much trading value, since it coincides with some important highs recorded last Wednesday.  Night owls should look for a possible buying opportunity on a pullback to 1151.50, a minor midpoint support that comes from the hourly chart (A=1159.50). _______ UPDATE (1:15 a.m. EDT):  The futures are in screw-the-pooch mode tonight, having dipped as low as 1148.50. It looks like it's going to be a long night.

Early Sunday evening, index futures were caught in a vicious short-squeeze that bids fair to recapture all of last Thursday's losses.  It would seem to be drawing its energy from the latest -- and rather large, even by American standards -- European bailout package.  The loan guarantees just announced amount to some $560 billion, offered to the EU's most troubled economies. This PR hoax could have legs, but from a trading standpoint it will lay an egg if it fails to push the E-Mini S&Ps above  1136.00.  That is Thursday's recovery high, and it lies somewhat above the 1130.75 peak achieved so far this evening.  The futures are currently trading for 1122.50, equivalent to a 140-point rally in the Dow above Friday's settlement price. _______ UPDATE (2:32 a.m. EDT):  DaScumballs are doing what they've been doing so very deftly since March 2009:  lifting index futures as high as they can get away with on razor-thin Sunday night volume.  From a Hidden Pivot standpoint, DaBoyz can get away with as much, perhaps, as 1170.75.

The decline of  the last two weeks is a less ferocious version of what we saw at the start of this year, so let's not jump to conclusions about what might evolve, since we know how things turned out the first time.  Still, yesterday's steep drop did generate a bearish impulse leg on the daily chart, and there will be no harm in treating it as though it is the resumption of the Mother of All Bear Markets. If so, the selling is off to a good start, having exceeded the worst-case target that could have been derived from the daily chart, 1168.00. The actual low was 1164.25, and that's enough of an overshoot for us to presume that more selling awaits. If the weakness does continue -- even for just another day or two -- it will put the futures in a hole from which the stairstep resistance of prior highs and lows will challenge bulls' resolve in ways in which it has not been challenged in quite some time. In the meantime, the futures will be best traded from the short side using the five-minute chart or less. Specifically, you should look for camouflage early on in reversals of minor rallies.

I mentioned in today's commentary that the 1176.25 midpoint support on the weekly chart is crucial to my outlook for the summer.  To keep the discussion simple, however, what I did not say is that the decisive, 40-point thrust beyond that midpoint is reason for us to have a strongly bullish bias at the moment; moreover, even if the midpoint is subsequently trashed to the downside, we'd need to at least keep an open mind about the 1317.25 target until such time as the point 'C' that engendered it has been broken. Most immediately, I'm not going to hazard a guess about what the futures might do today, since the last three days' action, if that's what you want to call it, have occurred inside the gratuitous chop of the two weeks that preceded it.  Traders should look for camouflage on the strongly bullish sign that would be generated by a print at 1210.25.  As you can see on a 180-minute chart, that would surpass an internal and external peak. ______ UPDATE:  I posted a worst-case low of 1168.00 in the chat room (11:05 a.m. EDT) when the futures were plunging but still above 1170.  They subsequently bottomed at 1167.00, so a stop-loss as tight as 1.25 points would have sufficed. If you initiated the trade, partial profit-taking is advised at 1171.75 or higher. (The bounce so far has carried to 1173.50.)

If the gratuitous slop of the last three weeks resolves to the downside, the first place you might step in with a cautious bid would be 1168.25, a Hidden Pivot derived from last week's high. Please note that that's somewhat below "structural" support from a low at 1771.00 recorded on April 8.