E-Mini S&P

When I mentioned in today's commentary that we would monitor the market's vital signs very closely I was serious, since it wouldn't take much to put the extravagant forecast I've  made for the Dow on ice. To that end, I've identified an 1175.12 "danger threshold" for the S&P 500 Index, but for the mini-futures the equivalent would be  1170.75. That's a tick beneath a low on the daily chart recorded on April 8. More immediately, based on the futures' uptrend at the close, we should look for buyers to take this vehicle up to at least 1198.50, a Hidden Pivot resistance that can be shorted with a stop-loss at 1199.25.  Night owls should note that the midpoint lies at 1191.50 -- just two ticks below the so-far after-hours high.  _______ UPDATE (11:41 p.m. EDT):  Here's a short I am recommending to night owls that will pre-empt the one at 1198.50:  Short 1196.25, stop 1197.25.  This pattern is a beauty, derived as follows with the 5-minute chart:  A=1180.00 (April 28, 12:10 p.m.); B=1192.00 (2:30 p.m.); and C=1184.25 (3:55 p.m.). ________ FURTHER UPDATE (11:01 a.m. EDT):    We lost $50 on the trade.  Looking back on 20 years of Hidden Pivot forecasting, the failure of 1196.25 to stop the rally even briefly ranks as a stunner, since the pattern was close to perfection.  Anyway, what it means is that bears had better not get their hopes too high right now.

A print down at 1170.75 today would turn the daily chart quite bearish. Coincidentally, yesterday's downdraft pointed to a minimum 1170.25. The midpoint sibling of that Hidden Pivot, 1182.50, has already been violated decisively, so we should expect the selling to continue into Wednesday, at least.

The weekly chart for June E-Mini S&P yields a very promising (i.e., reliable and nicely tradable) pattern. I say this because in late March there was a 20-point pullback from within a single tick of the 1176.75 midpoint. The fact that the pullback lasted only a day, and that the midpoint was left in the dust just five days later, makes it very probable that 1317.25 will be reached. That would represent a rally of 9% from these levels, and the target should be considered a VERY high-confidence number. For me, that means I will tune out any dramatic forecast that calls for a "stock market collapse" at any time now, before the target has been reached.  More immediately, we should still plan to short 1219.25 even though it has taken far too long for the futures to get there and the target is too well advertised. A 1220.25 stop-loss is appropriate. (Some may have noticed that yesterday's high fell three ticks from a clear target on the 15-min chart: A=1179.75 (4/19), B=1209.50 4/20) and C=1186.25, for D=1216.00.) _______ UPDATE:  After a soft opening, the futures broke sharply on news that Greek's debt had been downgraded to junk.  The selloff did not even remotely affect our bullish target, but it wll shift the burden of proof to bulls for the time being.

A 1219.25 target broached here last week remains as compelling as ever as a minimum upside target, but it has probably been advertised too loudly and for too long for us to expect it to work precisely.  Even so, since every top is potentially an important one, we'll stick our necks out with a 1218.75 offer, stop 1220.25.  You could also try shorting a seconday pivot at 1216.00 that just came onto my radar.  I'd give this one just a two-tick stop-loss, since we may be trying again at the higher number. _______ UPDATE:   The trade can stand as suggested, but the funereal pace of the rally to our target has drained my enthusiasm, turning what should have been a simple task into a project.  Please note that rally pivots work best when they are hit cleanly by a feinting thrust rather than being pawed at for fifteen hours.

The nasty chop of late has not diminished the likelihood of a shortable thrust to 1219.25, although it may have dampened the ardor of traders looking to ride the uptrend, such as it is. As of around 7:40 p.m. EDT, there was little for night owls to do, although a minor downtrend hinted of a potentially tradable bounce from 1199.50, give or take two ticks. _______ UPDATE (2:21 a.m. EDT):  As of the moment, this trade is working nicely, since the low so far tonight fell at 1199.25.   If you risked two ticks on the initial stop-loss , half the position could have been covered as soon as 1201.00.  I'll assume two contracts were acquired, however, and that only one remains.  Use an 1199.00 stop for now, switching to a 2.50-point trailing stop at 1206.25. _______ FURTHER UPDATE:  The futures stopped out the initial point 'C', making their eventual low at 1197.50 overnight before spiking to a so-far high today of 1210.25. Our position would have recorded a small loss of perhaps 4-5 ticks on the exit (or perhaps no net loss if partial profits were taken early in the trade).

I've hung out a 1219.25  rally target, but it is more to keep you from falling asleep than to induce you to consider said target as a serious and immediate trading possibility.   Money-making opportunities aside, it's hard not to notice that the futures have been struggling unwontedly since last Friday's micro-selloff.  In times past, the mere appearance of a multi-day struggle would have sufficed to allow DaBoyz to set the hook for a short-squeeze.  But because buyers, even those needing to cover shorts, have quite obviously dwindled to nothing, it seems more likely that DaBoyz will need to pull the rug out, dropping the futures in some ostensibly scary way before they apply the ol' short squeeze.  Most immediately, scalpers and night owls are advised to do their hunting on the five-minute chart, which at this instant suggests a bottom-fishing possibility at 1190.50 (A=1207.50). A three-tick stop-loss would be appropriate. _______ UPDATE (9:26 a.m. EDT):  An psychotic lunge overnight invalidated the 1190.50 target, so the trade is off.

A three-day rally has transformed the hourly from amorphous and more or less useless into a veritable cornucopia of price information.  The data suggest the futures are bound for a very shortable 1219.25 (A=1171.00) now that they have made suet out of midpoint resistance at 1199.50.  Night owls please note that a 1207.75 print trips an entry signal for a potential ride to 1209.50 (a midpoint) or perhaps even to 'D' at 1213.00.  _______ UPDATE (2:09 p.m. EDT):  The weak midpoint resistance at 1209.50 has precisely contained the rally so far, demonstrating yet again that this endless bear rally is generating almost zero buying interest.  The modest rally target at 1219.25 should be regarded as an almost done deal, but it could take three weeks for impotent buyers to get there. 

After we'd targeted a Hidden Pivot resistance at 1212.50 in our crosshairs for days, we missed shorting the top on Friday when the futures plunged from a peak an inch below it. (The actual top at 1210.50 had been recorded the day before.)  Is this the start of a major downtrend? It sure feels like it, even if it's valid to ask why, given the headlines, the Dow was not down 300 points instead of a paltry 126. Still, even a stock market that has been deaf, dumb and blind to reality will not be able to simply shrug off sobering new realities that have percolated into the headlines.   From a trading perspective, although there are not likely to be any "easy" shorts today, our general strategy will be to look for camouflage opportunities at the 'p' midpoints of minor retracement rallies. This will take some getting used to, since it's a price dynamic that we have not seen much of in more than a year.

Yesterday's near-miss dampened my ardor for shorting a Hidden Pivot at 1212.50.  This rally target is still valid in theory, but the trade would have felt best if it had been initiated mid-day yesterday and been followed by a nasty reversal.  Give it a 1214.25 stop-loss if the opportunity should present itself today, but don't expect too much. A better opportunity may await night owls, and I would therefore encourage you to exploit the possibility that yesterday's  high at 1210.50 will prove to have been an important top. This implies risking a few ticks on any abc downtrend(s) that show up on the lesser charts before the start of Friday's regular session.  If I have judged Mr Market correctly, and if a major top is indeed in, he will make it extremely difficult to get short, using the weekend caesura to screw nearly everyone.