E-Mini S&P

The key to today's chart is that the intraday high exceeded the labeled 'external' peak at 2697. That means the futures could fall by as much as 70 points and still be considered a buying opportunity.  They looked to be in no danger of falling that hard Tuesday night, especially because DaBoyz were being careful not to juice them too greedily ahead of the opening bell. A shallow correction overnight would provide a bullish set-up for Wednesday, and that's what I am expecting.  If the likely short-squeeze that would result gets rolling, you can use the 2767.25 target shown as an upside target.

The 2569.50 target shown can be used as a minimum downside target if stocks get hit again on Tuesday. It will remain valid as long as 2697.00 has not been exceeded to the upside.  A second pattern that could be useful in determining an alternative low for this remarkable sell-off can be fashioned using the 2696.00 point 'C' of the pattern shown as the point 'A' high of a new, downtrending ABC.  I have not done so, however, because the futures seemed likely to get short-squeezed higher Monday night, leaving point 'C' uncertain at the moment. If the futures go no higher than 2634.75, the resulting pattern would indicate slippage to at least 2584.00, with a worst-case destination of 2533.50. I will clarify this before Tuesday's opening, depending on how high the futures have traded overnight. ______ UPDATE (Feb 6, 6:02 a.m. EST): The futures bottomed overnight at 2529.00, a few points beneath the target given above, before rallying a spectacular 115 points to a so-far high at 2644.50. They have since slipped back and are currently trading around 2621.00, but if they can decisively exceed the 2630.63 midpoint pivot shown they would become an odds-on bet to reach 2662.50. Click here for new chart.

On January 24, with the E-Mini S&Ps in a steep climb and trading around 2840, I wrote here that I "expect to see real stopping power within perhaps 4-7 points either way of 2868.50."  Two days later the futures made a high at exactly 2878.50 (see inset) from which they have since fallen 121 points. Is The Top in? My gut feeling is no, that once this correction has run its course we will see a renewed push to at least marginal new highs before the nine-year-old bull market ends. There is also a chance that any such resurgence would produce more than a nominal high, going all the way to 3270 before the bull breathes its last. I raise the prospect of failure at a nominal new record high only because it would set up the nastiest bull trap I could conceive of. It would turn bulls giddy once again while forcing shorts to cover with reckless abandon. That, as far as I can imagine, would put a fitting end to a seemingly invincible bull market. For the moment, however, we can only ride out the current selloff, which seems likely to continue. A further fall of just 82 points would wipe out 2018's spectacular gains and muffle Wall Street's hubris for a blessed while.  It could then take weeks or even months to build a base for a rally to new highs. For now let's simply enjoy the show, secure in the knowledge that we cannot be fooled if we observe the process in a disciplined, mechanical way. For starters, that will entail placing an alert at 2651.50, where a print would turn the daily chart impulsively bearish for the first time in more than two years.

Despite the wack-o rally in the final hour, I have lowered my minimum downside target by 19 points, to 2789.50 (see inset). A Fed announcement that added nothing to our store of knowledge about future rate hikes caused shares to gyrate wildly in the final two hours of the session.  It was the usual sturm und drang, signifying nothing in particular. From a technical standpoint, the futures became a 'mechanical' short when they rallied to the green line (2827.03). I'd suggest paper-trading such signals until you become thoroughly familiar with various entry tactics possible using the Hidden Pivot Method. _______ UPDATE (Feb 1, 5:27  p.m. EST): Despite a wild couple of days that included two 25-point rallies, I still expect the futures to fall at least 2789.50 before they can set up for a push to new record highs.  That said, it is all but impossible to stay short to the target if you intend on keeping risk:reward in a healthy relationship.

The weight of selling remained palpable at the close, so we should expect even lower prices on Wednesday. My immediate target is 2808.50, and you can risk a theoretical $460 shorting one contract mechanically at 2836.50, stop 2846.00. The relevant pattern, derived from the hourly chart, is a= 2868.25 (1/29 at 2:00 p.m.; b= 2831.00 on 1/30). The inset shows how far the futures would need to fall to generate a bearish impulse leg on the daily chart.  Exactly 92 points, actually -- equivalent to a plunge in the Dow of nearly 800 points. ______ UPDATE (10:58 p.m.): Shorts are getting squeezed hard tonight, so I'll recommend canceling the trade suggested above.  The 2808.50 target will remain viable, however, as long as 2845.75 is not exceeded.

The futures pushed to the very top of a range where we might have expected considerable resistance. Now, if they don't retreat precipitously on Monday from their highs, look for the rally to continue to at least 2910.00 (see inset). That would equate to a Dow rally of about 300 points. However, it would also fall at least 250 points shy of the 27251 target we've been using to stay confidently on the right side of a trend that has gone on for far too long without correcting. The bullish pattern looks straightforward and reliable, but I am not recommending shorting its target unless you've racked up at least 5-10 points of profits on the way up. _______ UPDATE (Jan 29, 7:59 p.m.): The futures did indeed retreat, although we'll need to see quite a bit more than the 23-point drop that has occurred so far before we blow taps for the nine-year-old bull market. In fact, the decline has yet to surpass even a single prior low on the hourly chart, let alone the two we require to signal the creation of a bearish impulse leg. That would take a print at 2822.50. I expect index futures to fall at least somewhat overnight and to open weak, but it's anyone's guess whether the buy-the-dips crowd will step in around mid-morning if stocks get hit badly, since old habits die hard.  In any case, I'd suggest watching from the sidelines.

The futures on Wednesday somewhat exceeded a 2848.25 target I'd mentioned here, topping intraday at 2855.25. Ordinarily I would regard this overshoot, although small, as distinctly bullish. In this case, however, I will allow for the possibility that a 2868.50 target that shows up on the composite weekly chart (click on inset) is going to repel bulls, at least for a while and in potentially tradable fashion. I cannot give you a penny-precise target, since the ABC coordinates on the composite chart come from different months. However, I expect to see real stopping power within perhaps 4-7 points either way of 2868.50. We shall soon see.

Just when a rally to a middling Hidden Pivot target had begun to look all but certain, the futures vexatiously fail to deliver. They'll have another chance on Friday, but we should be open to the possibility of a multi-day decline that puts the target at least temporarily out of reach.  Regardless, and unless the broad averages sell off hard for a week, we still have two Hidden Pivot objectives in play:  2824.00, or 2848.25 if any higher. I've included a long-term chart (click on inset) that shows a third, well-defined target at 2868.50. The chart is a blended composite, so the target should not be expected to work precisely. However, it is close enough to the 2848.25 target given above to imply there's considerable stopping power somewhere in-between.  Meanwhile, I'm as curious as you are to see how stocks behave ahead of the weekend, so let's simply enjoy the show and try to glean what we can from it. ________ UPDATE (Jan 21, 5:03 p.m. EST): Friday's moderate rally did not change my outlook or the analysis given above.  _______ UPDATE (Jan 22, 8:23 p.m.):  Still no change.  The rally is too steep at this point to catch a ride, unless perhaps by way of a 'camouflage' set-up that would require your diligent attention to the 5-minute (or less) chart.

Buyers did something on Tuesday that we don't see very often these days, pausing for a few hours in their manic scramble to own every share they can get their hands on. Bears, with the wind at their backs for a rare change, failed for the umpteenth time to seize the advantage. When the dust settled, the futures had closed off a whopping nine points after being down as much as 20 points intraday. Oh well. Since a second day of accelerating weakness seems most unlikely, we'll stick with the 2824.00 rally target given here earlier -- or 2848.25 if any higher. Buyers can use a 'mechanical' set-up to generate a bid near the red line (p=2725.25), but I'd suggest using 'camouflage' on the one- or three-minute chart to do the actual trade, since the entry risk otherwise would be $2016 theoretical per contract.  Stay close to the chat room if you seek guidance for this in real time.  If the stock market startles by going lower we can sit back and enjoy the show, since many subscribers still hold soon-to-expire VXX calls purchased a couple of weeks ago for an average o.67. If the broad averages sell off as hard as they did for a while on Tuesday, those calls could triple in value in an hour. ______ UPDATE (Jan 17, 4:22 p.m.): No change. At the rate stocks are climbing, the E-Mini S&Ps should reach the 2824.00 target by no later than early Friday. It would equate to a 500-point rally in the Dow.  Of course, none of us will be the least bit surprised when the target is reached, but what might surprise some observers is how quickly this will have occurred. Please note that once 2824.00 has been exceeded by more than 1.50 points, the 2848.25