E-Mini S&P

Today's chart takes the long view while lending authority to the possibility that the crazed leap from late December's lows has been just a bear rally. It would have to surpass 'external' peak #2 to qualify as impulsive on the weekly chart, and we shouldn't presume in the meantime to know how things will turn out. (Full disclosure: I hate the market so much that even if the S&Ps were to hit new all-time highs, I would still be very suspicious of a bull trap.) However vexatious the long-term charts might be, getting the lesser charts precisely right is as easy as shooting fish in a barrel. Accordingly, I'll recommend bottom-fishing p=2773.75 (corrected) with a 2774.00 bid, stop 2772.75 stop-loss. The order can stand only if the futures have traded no higher than 2799.00. On the 15-minute chart, you can find the pattern starting with a=2818.00 on 3/4 at 9:45 a.m. _______ UPDATE (Mar 6, 8:44 p.m. ET): The trade was stopped out for a theoretical loss of $62 per contract when a clear and compelling midpoint support showed no resistance to the downtrend. This means the futures are now very likely to fall to at least D=2748.50. However, the descent has been tortuously slow and choppy, so I'll suggest moving to the sidelines. It is surprising that bears were unable to bury this vehicle Wednesday, since there seems to be almost no buying interest other than from short-covering bears. Here's the chart. _______ UPDATE (Mar 7, 10:23 p.m.): As anticipated, the March contract fell to 2748.50 -- but not much farther. Buying power is still practically nil, but bears are evidently too enfeebled to seize the advantage. We'll plan on sitting out Friday's 'action' unless something interesting develops. ______ UPDATE (Mar 8, 9:55 a.m.):  Looks like yet another day

Monday's vicious shakedown was poetry in motion. An hour into the session, stocks were falling so hard that you might have thought the world was about to end. Far from it, as suckers who sold into the avalanche were soon to discover. DaBoyz had laid the groundwork for Monday morning's crime spree by goosing shorts the night before. This caused the E-Minis to gap 13 points above last week's highs, putting bears back on their heels. The perps then spent the next 16 hours distributing stock at prices above the highs before pulling the plug.  Had they been child molesters -- and I mean no insult to pederasts in comparing them to traders -- they could not have had more fun if they'd had free run at an orphanage. Buyers Couldn't Wait The purpose of the distribution was to get the pros sufficiently short to provide some buying power when stocks fell. But they evidently couldn't wait until Tuesday, let alone until later in the week, since urgent short-covering commenced a little more than halfway into the session. You can see the results in the chart (inset). The squeeze recouped nearly half of the day's losses, presumably leaving bears sufficiently anxious to keep stocks buoyant on Tuesday even if a few real sellers show up. We'll be neutral at the bell, since the futures even at their lows failed to exceed the two prior lows we require to generate an impulse leg. A weak one is all we got, suggesting that another round of punitive selling is no more likely than a rally toward new all-time highs.

With almost no buying interest over the course of the week, DaBoyz still managed to maintain altitude. They did so after slightly exceeding a 2811.25 rally target we'd been using as a minimum upside projection. Although I expect the move to hit 2851.75, a Hidden Pivot first identified here nearly a month ago, we can use a lesser target at 2833.25 (see inset) for now. The futures tripped a mechanical buy signal on Wednesday when they pulled back to the green line (2781.60), but I did not explicitly recommend the trade because it looked like it would be a tough slog with some overnight holds. ______ UPDATE (Mar 4, 11:56 a.m.): This is the nastiest bull trap we've seen in months -- a reminder that DaBoyz have been faking a rally for more than a month with precious little buying power -- other than from short-covering. Today's downdraft has been orchestrated to renew the phony uptrend's sustainability. The deception was masterfully executed because it allowed DaBoyz to distribute stock and get shorter above Friday's closing prices for sixteen blissful hours.  This will give them room to buy when the shakedown hits bottom.

A minor rally target at 2811.25 has kept us steadfastly on the right side of the trend -- profitably so for subscribers who stuck with a 'mechanical' trade detailed here Thursday morning. (It triggered at 2770.25 but was too slow to develop to be called an easy winner.) If the target is decisively exceeded, that would shorten the odds of more upside to 2851.75, a Hidden Pivot of larger degree that first appeared here on February 10. The futures have taken an ambitious leap Sunday night to 2803.25, but it's not possible to say at the moment whether this may have exhausted short-covering for the time being. _______ UPDATE (Feb 25, 5:53 p.m.): Buyers slightly exceeded the 2811.25 target. The 2.75-point overshoot will add slightly to the bullishness of the chart, since a pattern this clean ought to have topped within no more than a tick or two of our objective. First, though, a correction. It could come down to as low as 2763.00 without negatively impacting the picture. _______ UPDATE (Feb 27, 9:54 p.m.): If the engineered swoon to 2775.00 today was the correction, then the futures are headed up to 2818.50 on Thursday.  Short there only if you've made at least a small profit on the rally. _______ UPDATE (Feb 28, 9:29 p.m.): Zzzzzz. No change.

We've been using an ambitious, 2851.75 rally target to keep our minds off reality, but more immediately there is 2789.25, a Hidden Pivot that I expect to produce a tradeable pullback. My recommendation is to get short there only if you've profited from the uptrend. Elsewhere on the home page, I've reproduced a graph that shows how the Dow is nearing levels where, from a visual standpoint, a rally to new record highs will begin to look inevitable. As much could be said of the E-Mini S&Ps, which lie just shy of a series of three peaks made just before December's steep plunge. It's more than a little tempting to think an ascent to new all-time highs would set up a devastating bull trap. This is something to ponder as the stock market does the seemingly impossible, climbing a mile-high wall of worry. ______ UPDATE (Feb 19, 6:02 p.m.): Feeble buying pushed the futures to 2787.50, less than two points from the target flagged above. It remains valid, but any progress above it would likely encounter resistance at 2795.91. That Hidden Pivot should be the end of the uptrend, at least for a short while._______ UPDATE Feb 21, 8:39 a.m. ET): Upthrusts have continued to exceed minor Hidden Pivot targets, suggesting the futures want to go higher. The rally has been untradeable if keeping risk:reward at 1:3, since each new marginal high has given way to a pullback greatly exceeding the incremental gain from peak-to-peak. Here's a way around it, a mechanical set-up that would allow entry via a limit bid and a single stop-loss. Be aware, however, that the initial risk on a four-contract position would be $2800, for a potential gain of as much as $8200 if D=2811.25 is reached. As always, you could cut this down significantly

The pattern shown, with a 2851.75 rally target, is unappealing because of the 'sausage-y' impulse leg. However, because there are no good alternatives, we'll use it for now to calculate a minimum upside objective and some buying levels. The set-up so far is not conducive to a mechanical bid, and things are unlikely to improve sufficiently to provide an easy entry point. Our bias should remain bullish for now nonetheless, with a focus on intraday opportunities. _____ UPDATE (Feb 12, 7:43 p.m. ET): Just to get ahead of any possible "surprises," let me mention that a plunge to 2672.35 from these levels would trigger a 'mechanical buy', stop 2612.25. _______ UPDATE (Feb 15, 9:06 a.m.): Here's a fresh rally target at 2789.25. It is derived from shifting to a lower and more compelling point 'A'.

Like many of you, I've been eagerly awaiting the day when this powerful bear rally drops dead. Instead, AAPL has rallied with a vengeance, drawing a thousand doomed stocks into its vortex. Yes, the rally is a hoax. And yes, the Masters of the Universe have used it to distribute as much stock as possible into the hands of rubes, pensioners and widows. Under the circumstances, I've been a reluctant bull all the way up, duty bound to follow the mechanical logic of my charts. However, the effort has worn me out, and that's why I've selected the thumbnail chart today that I did (click on inset). It gives me the wherewithal to say that maybe, just maybe, the insidious promoters of the Big Bounce have breathed their last. That Ominous Cough? This is a logical inference, given that the E-Mini S&Ps have begun to roll down from a midpoint Hidden Pivot at 2732 where buyers were likely to cough ominously, if cough they have. The pattern itself is unfortunately not of the highest quality, and so I am prepared to see stocks come roaring back next week -- led, of course, by AAPL, whose iPhone troubles have suspiciously melted away in recent weeks. If that is what happens, I hope you will pardon this digression. Think of it as a fleeting moment of sanity in a crazy world.

DaBoyz are nothing if not risk averse, and so there will always be days like Wednesday, when the short-squeeze thrusts they use to force stocks higher will pack barely enough energy to lift a feather. That describes the session's soporific price action, an inside day that left a 2760.25 target unchanged as our minimum upside objective. (Note: That's slightly higher than the number given here earlier because I've moved an erroneous coordinate.)

The 2728.25 rally target we've been using remains viable and has kept us on the right side of the move -- which is to say, in a profitable groove and out of trouble. Buyers stalled very precisely Friday at a lesser Hidden Pivot at 2715.50 (see chart inset), but the subsequent pullback has been shallow and implies they'll be back at it when the new week begins. Although I'd suggested earlier that you consider shorting 2728.25 with a tight stop if you've made at least $1000 on the way up, I have no great enthusiasm for the trade. Moreover, I'll suggest raising your sights to 2759.00, the 'D' target of this pattern, which was created by sliding the point 'A' low down a level. I am confident the target will be reached because the point 'B' high of the pattern decisively exceeded the imposing 'external' peak at 2592.00 recorded in mid-December, as a good impulse leg should.