E-Mini S&P

My bias remains bullish, although it is clear that the futures are not capable of making any upside headway whatsoever without the crucial boost provided by short-covering.  A thrust today touching 1113.00 would draw bears in once again, but DaBoyz left that drama for another day when they called it quits on Friday. They had already succeeded in creating a bullish impulse leg on the hourly chart the night before on thin volume, and this should set the stage for a further push today to at least 1107.50.  That's a midpoint resistance, and if it's brushed aside we could expect a finishing stroke to at least 1118.50.

Bears didn't stand a chance yesterday after DaBoyz finished smoking out sellers on relatively light volume before the opening bell.  The sellers pounded on first-hour lows till around mid-morning, but it was with light ammo that was incapable of inflicting much damage. Exhausted and out of bullets, bears turned tale and ran as DaBoyz applied the obligatory short-squeeze. Thereafter, stocks recouped half the day's considerable losses in the space  of 15 minutes, then mopped up with a finishing stoke  that left the futures more or less unchanged on the day.  With zero real bulls to buy this market higher, and bears presumably spent for the moment, we might expect stocks to chop aimlessly sideways as the week draws to a close.  However, structural resistance above the week's highs around 1112 looks practically non-existent, so don't be surprised if there's an attempt to run 'em.

The futures are down about nine points -- equivalent to around 70 Dow points-- shortly after midnight.  As I noted here a few days ago, when DaBoyz let stocks slide at night, their goal is to find a level at which selling dries up. Then they'll suck up whatever shares come in for sale overnight, but lower their bids if bearish momentum picks up before the opening.  Most of the time, unless there's awful news to trigger an avalanche of selling on the opening, these operators will succeed at exhausting selling before the bell.  It is for that reason that we should maintain a bullish bias for Thursday.   However, if the decline were to exceed the two prior lows shown in the chart, that would be warning of more downside to at least 1088.50, a Hidden Pivot you could bottom-fish with a stop-loss as tight as three ticks.  Alternatively, the futures would need to touch  1107.75 today to turn the hourly chart bullish. _______ UPDATE (1:30 p.m. EST):  The futures noodled around the 1088.50 support for 20 minutes without showing much lift, so exit would have been on the stop, generating a trading loss of about $38. The eventual low was at 1084.50,suggesting that still lower lows lie ahead.

Uncomfortable as I am seeing the stock market's glass as half-full these days, it's hard to fathom that the Dow was off by a mere hundred points yesterday.  What with all the bad news, including horrific consumer confidence numbers, we might have looked for losses twice as large as those that occurred.  And now, true to form, the mini-indexes are getting short-squeeze Tuesday night, albeit only mildly so far. There are two modest targets just above -- at 1099.25 and 1102.50 -- but if the second is brushed aside, that would hint of a rough opening hour on Wednesday for bears.  If the futures fall, though, you should use the pattern in the chart to gauge the strength of the downtrend.  A failure to bounce at the midpoint would be telegraphing more weakness over the near term.  Please note that if the pattern plays out more or less as drawn, causing 'P' to occur, so to speak, in the middle of nowhere, you can try bottom-fishing with a stop-loss as tight as three ticks.

In trading Sunday night, the futures were frolicking above the midpoint resistance shown in the chart, but they'll need to close above it on Friday to significantly shorten the odds of an easy finishing stroke to 1167.75.  More immediately, a push above a minor Hidden Pivot midpoint at 1111.25 -- a tick above Friday's high -- would open a path to at least 1117.25. DaBoyz are unlikely to stick their necks out overnight unless there is news enough to slap shorts around with impunity, but if they can keep the chop shallow in the meantime -- above 1103.00, say -- goosing the futures to 1117.25 at the bell should be a piece of cake.

Some chartists like to work ABCD patterns in the manner shown -- and so shall we for once, although I'd suggest using the 'D' target analytically rather than for bottom-fishing.  Other potential swing lows for today lie at 1083.50 and 1077.75.  Those numbers represent, respectively, a 50% retracement, and a 61.8% retracement, of the rally cycle begun  on February 12 from 1060.00.

Yesterday's seemingly strong rally was all bluster when viewed on the daily chart, since it surpassed not a single prior peak of significance. In fact, it looked like a weakling on the hourly chart as well. So that we don't miss a sign of real strength this morning, let's set a benchmark at 1103.75. A print at that price would create an unambiguously bullish impulse leg on the hourly chart. More impressive still would be a print at 1119.75, since, once above that price, the futures would become a lead-pipe cinch to test supply near 1140.00.

No session would be complete, it seems, without the obligatory Whoopee Cushion rally in the final hour. Friday gave us yet another, although it wasn't quite strong enough to push the broad average to a positive close. Nor has there been any follow-through so far Sunday evening. The mini-indexes were trading mostly in an ultratight, two-tick range after opening a couple of points lower.  It seems unlikely they will pick up the pace this evening, since they will be anticipating the closure of U.S. markets on Monday for President's Day. In any case, there is little to recommend for night owls at the moment.

As of around 2 a.m., the futures had come within two ticks of the 1080.25 rally target flagged here yesterday. If they get short-squeezed above it -- a good bet, I would say -- look for the rally to continue to at least 1092.50.  There were  no good handholds for a camouflage entry on the lesser charts, but I wouldn't recommend using a breakout above 1080.25 instead, since you're bound to have plenty of company. ______ UPDATE(11:27 a.m. EST):  The futures' chicken-hearted confrontation with the 1080.25 pivot last night proved telling, since the index has been down by almost 17 points this morning. DaBoyz are attempting to squeeze shorts at this moment, but I doubt they'll be able to wring much mileage out of them.  You can short 1069.50, stop 1070.25, if the opportunity should arise. _______ FURTHER UPDATE (11:35 a.m.):  Cancel the short offer, since the futures are selling down hard from a 1067.75 high. The target remains valid nonetheless, but we should have preferred to short it on the first trip up.