E-Mini S&P

Buyers shredded a key resistance on Friday, leaving little doubt about whether they'll achieve the 2728.25 target shown in the chart. It lies 57 points above, and if and when the futures get there, the Dow Industrials, which settled at 24,706, will be trading for around 25,200. In an update sent out Thursday night I'd suggested getting short if stocks rallied strongly to end the week but pulled back in the final hour. The fact that they barely pulled back at all will have left bears badly on the ropes, where they will remain unless some horrific headline over the weekend bails them out. In the chat room before the close, I mentioned taking a small short position, but this was just a token contrarian bet based on the rally's unstoppable look.______ UPDATE (Jan 22, 10:46 p.m. ET): Tuesday's plunge brought a tinge of doubt to the 2728.25 projection, but it will remain valid in theory until such time as sellers exceed the point 'C' low at 2567.25. Actually, ES would become a mechanical buy in theory if it comes down to 2607.50 (the green line in the chart)._______ UPDATE (Jan 23, 5:09 p.m.): The futures bounced from 2612.50, five points above our tripwire for a mechanical buy. It remains viable, although I'll suggest paper trading this one unless you know how to convert the set-up to 'camouflage' in order  to cut the initial risk of about $2000 per contract down to as little as $60.

Buyers blew past a promising rally target at 2636.50 on Thursday, implying they’re spoiling for more.  In fact, the effort exceeded virtually every Hidden Pivot resistance identifiable on the intraday charts, including one at 2642.50 shown in today's chart (see inset). Although the pullback from the intraday high was sharp, bulls had recovered most of it by early evening, leaving shorts badly on the ropes for Friday. All of this makes a move to new recovery highs seem inevitable — so much so that a trader might well have asked at Thursday's close, “How can I go wrong taking a long position overnight?” It is when we start thinking this way that a bell should go off warning us to consider the opposite — i.e., a punitive selloff from out-of-the-blue.  Bottom line: We’ll be hell-of-bullish at the opening, but ready to unfurl the yellow flag at the first sign of a stall.

The 2634.00 rally target shown in the chart (see inset) lies between two previously given Hidden Pivot resistance points. Those levels could conceivably show stopping power, but use 2634.00 as a minimum upside objective for the near term, or 2636.50 if any higher. I am not recommending getting short because there are so many places within a tight cluster of pivots where a short-term top could occur. Their mere existence implies that if buyers can push easily past them and close above 2640, the rally may just be getting warmed up. _______ UPDATE (Jan 16, 8:10 p.m.): The futures sold off in the final hour after getting within eight points of the 2634.00 target. It remains valid nonetheless, but seeing this rally through will require more patience than has been demanded of us in the past. This is a feature of bear-market rallies, when, in certain phases, those who manipulate stocks are tasked with the delicate distribution of shares when the only significant source of demand for them is short-covering bears.

When the week ended, the E-Minis had struggled unsuccessfully for two days to achieve a modest target inches above their intraday highs. This is distributive price action, although we should allow for the possibility that whatever was weighing on traders' febrile brains on Friday will conveniently have been forgotten when the new week begins. The hourly chart remains bullish in any case and points most immediately to 2609.75 as the next point of resistance. This target is sufficiently clear and compelling that I will suggest shorting there with a stop-loss as tight as 1.00 point -- but ONLY if you have been long for at least a portion of the ride up. If the stop is hit, raise your sights to a minimum 2632.75, yet another Hidden Pivot resistance that promises to show precise stopping power._______ UPDATE (Jan 14, 9:25 a.m.): The rally has reversed overnight, although its 2632.75 target will remain valid in theory until such time as C=2560.50 is exceeded to the downside. Here's the chart. _______ UPDATE (Jan 15, 12:42 p.m.): And here's yet another chart, since I am raising my minimum upside projection for the near term to 2638.75. Expect it to show precise stopping power.

Friday's short-covering binge blew past the 2501.50 midpoint resistance (see inset) with such force that there should be little doubt about a finishing stroke touching D=2564.50. I am recommending a tightly stopped short there only to traders who have made a few bucks being long for the ride up. It's impossible to predict where the futures will open Sunday evening, but it may be possible to get long via a camouflage set-up on the 5-minute chart or lower. In any event, your trading bias should be bullish as the new week begins. _______ UPDATE (Jan 7, 6:57 p.m. ET): The 2564.50 rally target I flagged here (see above) and in the Saloon on Friday morning caught Monday's high almost exactly. (Click here to see how exactly.) I'd recommended getting short at the target only to subscribers who'd made money on the way up, but there was only one person who appears to have done so, and that's why I haven't established a tracking position. The bullish phase of the trade was worth as much as $2300 per contract to anyone who got long when I first aired the target in the Saloon at 11:03 a.m. A short initiated subsequently at 2564.50 could have been covered for a profit of as much as $800 per contract, since the futures pulled back to 2547.25 after topping. If you need further guidance, ask in the chat room. _______UPDATE (Jan 8, 9:16 p.m.): Use the 2616.00 Hidden Pivot resistance shown here as a minimum upside target for the near term. As always, an easy move through so clear and compelling a 'D' would imply the trend is likely to continue. _______ UPDATE (Jan 9, 5:24 p.m.) A tedious day, so we lowered our sights to 2604.25, the target of a somewhat smaller pattern. Even

Apple shares have plunged on news out after the close that China's economic slowdown will adversely impact earnings. The stock dove nearly $14, bottoming so far at 144.51, when trading resumed at 4:50 p.m. after a brief halt. The wizards on the buy side at the moment are not big risk-takers, so we can infer that they think the shares they are sucking up between $145 and $147 are a pretty good deal. Even so, there's an unfulfilled Hidden Pivot target at 143.36 that I expect to be achieved before sellers are spent, and if it fails we could see still more slippage to as low as 138.20. All of this matter a great deal, since, as I've repeatedly emphasized, the broad averages can't rise if AAPL is falling. This implies that there could be a juicy contrarian trade in index futures if AAPL seems to have put in a bottom overnight. The E-Mini S&Ps, for one, dove while trading was halted in AAPL, but they are now spring-loaded for a nasty short-squeeze rebound if it appears the worst of the selling is over. Plan accordingly.

The 2533.00 target broached here earlier remains valid as a minimum upside objective, but it's time to shift our gaze higher to the 2595.00 target of the larger pattern shown in the chart. Its A-B impulse leg is well formed, implying a pullback to the green line from around 2550.00 can be used to get long via a 'mechanical' set-up. (Note: The trade would be invalidated if the futures fall beneath 2472.75 first.) If you're not sure how 'mechanical' trades work, tune to the chat room at the appropriate time for informed discussion. If buyers blow past p=2533.88 with little trouble, that would significantly shorten the odds of a finishing stroke to 2595.00. _______ UPDATE (Jan 2, 5:52 p.m.): DaBoyz have taken the futures down sharply on news that Apple has lowered its Q1 sales outlook, but it smells like a set-up for a short squeeze.  The mechanical set-up is not ideal for a buy at 2483.75, stop 2452.00, but I'll mention it nonetheless because the pattern shown, with a failed, would-be impulse leg intraday, looks like it will eventually deliver the 2578.25 target.______ UPDATE (Jan 3, 10:36 a.m.): The mechanical trade is hanging on by a thread, but if it is stopped out [It was!] the pattern shown here would be activated, putting in play a 2383.13 minimum downside target. _______ UPDATE (Jan 4, 9:15 a.m.): A stealth rally overnight on vaporous volume has failed so far to generate a bullish impulse leg. That would take a print at 2489.25, just above the overnight high. It would require no less than 2523.25 to invalidate the bearish target at 2385.38 (slightly corrected from the number given above).

A short-covering panic drove the futures past the 2465.00 midpoint pivot with such force that nothing less than Armageddon could stop them from reaching 2533.00, the 'D' rally target of the pattern shown. The by-now obligatory pullback from p2 (2499.00) may provide an opportunity to get long overnight 'mechanically', but you may have to execute the trade at the red line with a 2450.50 stop-loss. Since this would imply $825 of of theoretical risk per contract initially, I'd suggest converting the signal to a 'camouflage' set-up. This potentially hard-to-execute trade is for Pivoteers only. _______ UPDATE (Dec 28, 3:55 p.m.): The unfulfilled target at 2533.00 remains valid in theory, although the 'mechanical' set-up we were looking for to get long did not materialize.  As a practical matter, the uptrend was untradeable via a buy-and-hold strategy, since the marginally higher peaks that occurred intraday were followed by swoons of more than 40 points.

To properly judge the staying power of the rally, we should put aside its spectacular nature and focus, simply, on impulse legs. If you didn't know that today's surge was one for the record books, and if someone had told you the chart shown consists of one-minute rather than hourly bars, you'd be less intimidated by what has occurred.  We'd also know to hold the applause until such time as the surge exceeds a couple more external peaks, especially without pausing for breath. If we should see buyers exceed peaks #2 and #3 as effortlessly as they got past #1 today, we'd have more reason to infer that this bear rally is just getting started. Let's kick back for now and see what the next couple of days brings.