E-Mini S&P

Friday's phony spike should have trapped enough bulls to spark more than the feeble 12-point selloff that we saw.  That the downtrend didn't even reach its 'p' midpoint is a reason for bears not to get their hopes too high about a major top being in. This should pose no problem for those who shorted Friday's high on my advice, since, in an intraday update, I recommended taking partial profits at what turned out to be the intraday low.  Officially, and adjusted for partial gains realized thus far, we are short two contracts with an 1171.00 basis.   Use an 1153.75 stop-loss for one of them until 1144.00 it touched, switching to a five-point trailing stop thereafter. The other contract is to be held for a possible home run and stopped above Friday's high, 1159.50. _______ UPDATE (3:00 p.m. EST):  On a sloppy, turgid, tediously trendless day, the futures have triggered a stop at 1146.25 off an 1141.25 low. Imputing the implied 13-point gain to the remaining single contract that we are still short will raise its cost basis to  1184.00. At current prices, that represents a paper gain of $1900.  ______ FURTHER UPDATE (3:04 p.m. EST):  Since the March contract expires this week, let's roll the position, covering the March conract(s) while shorting the June contract(s) for a debit of up to 4.50 points.

Let's plan on shorting 1159.25 with a two-point stop-loss. I don't usually favor patterns so very elongated as the one shown in the chart, but the two rally legs are sufficiently similar in appearance to beckon a modest, $100 speculation.  This being a Friday, and Mr Market being, always, a sonofabitch, we might expect the target to be hit in the final 90 seconds of the session.  My advice is to take the trade anyway, provided you are able to monitor it, and to use the stop-loss, when index futures resume trading Sunday evening. _______ UPDATE (10:14 a.m. EST):  The futures collapsed after spiking to 1159.50 on retail sales news.  Our short offer could not have been more perfectly positioned, and in the chat room I advised taking profits on half the position with the futures trading about 12 points lower.  Use an 1153.75 stop-loss until 1144.00 is reached, then switch to a 5-point trailing stop for half of what remains.  For grand-slam potential, you should keep a vestigial piece of the original position with a stop-loss above 1159.75.  Officially, we'll retain a single contract on those terms.

Price action has been so ratty lately that there's no percentage in guessing where this headless little rodent is going next.  However, since the presumption of higher prices has reached the point of near-certitude, we should probably focus for a change on downside opportunities. For starters I'll suggest jumping on any downtrend initiated on the 3-minute chart with an impulse leg shorter than four points and a single-bar C. The accompanying chart shows what I'm talking about. _______ UPDATE (12:30 p.m. EST): Good thing we went into today's decline thinking SMALL.  The Dow is off a whopping 18 points right now after being down as much as 60 points earlier in the session.  Makes one wonder, is that all there is?

Take a good look at the chart alongside if you think it's time for bears to take a stand.  If ever a price pattern reeked of upwardliness, this is it. The futures showed no hesitation last week maneuvering into position to head-butt  January's highs, and so we shouldn't look for them to resist the onslaught for long. Let's hope the broad averages are not predicting the political resurgence of Barack Obama and his whacky ideas. That would be quite a price to pay for fostering the egregiously misguided impression that Mr. Obama has turned out to be a guy that Wall Street can live with.

At the risk of sounding like Prof. Irving Fisher at his most notorious, stocks appear to be incapable of falling these days.  There was zero buying interest yesterday, and yet, instead of pulling back to get some running room, the E-Mini S&Ps remained airborne, never dipping more than two points below a Hidden Pivot target at 1137.25 that we'd used to get briefly short the other day.  Of course, when we become truly convinced that the futures cannot fall, a mental alarm should go off warning us that that is exactly what is about to happen. Even so, I wouldn't suggest staying short this vehicle simply because 1137.25, or somewhere thereabouts, is a logical place from which the inevitable plunge is likely to occur. We'll stick to our discipline and accept the fact that we were stopped out, but let's keep in mind that it will nearly always be possible to get more or less risklessly short on tiny abc downtrends; and that when the market finally does fall apart, the avalanche will begin with a barely noticeable impulse leg on the 1- or 3-minute chart.

The futures exceeded a high-confidence rally target at 1137.25 that we've been using for a while -- but not by enough to stop us out of the short I'd advised from that price.  (The stop-loss suggested was at 1139.25; the actual high was 1138.75.)  The position is holding so far Sunday night, but we'll monitor it closely and stick with the original stop, since it is always more dangerous to initiate a trade on the close -- especially on a Friday -- than earlier in the day.  A move above the target would ordinarily be warning of more strength to come.  In this instance, however, any such strength could be short-lived, since its sole source would be short-covering resulting from the relatively shallow pullback from Friday's high. If the little sonofabitch should break loose, though, brace for more upside to at least 1156.50.  That's a Hidden Pivot that should be shorted aggressively and with a stop-loss as tight as 1158.25.

Absent real buying interest or even much of the artificial kind that comes from short covering, the futures have managed to plod higher nonetheless, magnetically drawn toward a compelling target we've been using at 1137.25. On Thursday, the pullback we might have used to buy on a dip did not quite make it down to our bid, which had been placed at a Hidden Pivot resistance that is now  support. As a result of yesterday's price action, we also have a lesser rally target at 1133.25 and its sibling midpoint at 1124.25. That last number was resisting the uptrend as of around 6 p.m. EST, but if and when it gives way, the remaining nine points to 1133.25 should come easily. The 1133.25 resistance does not negate the more important one at 1137.25; indeed, it looks as though it could work precisely enough to allow scalpers to attempt a short there with a stop-loss as tight as 1134.25.

The futures were drifting lower without much conviction Wednesday night, presumably bound for a minor Hidden Pivot at 1112.75. This number is unappealing for bottom-fishing, however, since it coincides with visually obvious support carved out earlier this week in overnight trading.  The odds would be better leveraging camouflage near 1110.75, the Hidden Pivot midpoint associated with the 1137.25 rally target given here yesterday.

Yesterday's punk performance will have no bearing on the 1137.25 rally target proffered here earlier. It looks like a lock-up, but it will also make for an enticing short, stop 1139.50, if and when the futures get there.  Buyers should look for camouflaged bottom-fishing  opportunities if there's a pullback to 1110.75.  That's the Hidden Pivot midpoint associated with the target.