E-Mini S&P

The futures are within easy distance of a clear and obvious target at 2708.50 noted here previously. The nutty dive before the opening did not affect my outlook, although it did generate an alternative target at 2737.75 that should be used if the lower number is exceeded intraday by more than 2.50 points or the futures close above it for two consecutive days. The chart shows the higher target. It also implies that a 'mechanical' bid at the green line (2654.69) could be used to get long, stop 2627.00. Since the initial risk would be more than $1300 per contract, I'd recommend using the mechanical signal to set up a 'camouflage' entry on the lesser charts. Stay close to the chat room if you seek guidance on this in real time.

Today's chart is the one I've been trading for the last week.  It is bearish, with an unfulfilled downside target at 2492.75 and a worst-case low of 2377.25. If you play it strictly by the Hidden Pivot rule book, the futures became a 'mechanical' short when they rallied to the green line (2668.25) near the end of Monday's session. Since the trade calls for a stop-loss at 2727.00 that would risk nearly $3000 per contract initially, I would tend to use charts of much smaller degree, 'camouflage'-style, to pare the risk of getting short to more like $60-$100 theoretical. I offer the chart not for your explicit trading guidance, but to allow you to see more clearly the bearish framework within which the rally from Friday's low has proceeded. I am not persuaded strongly either way as to whether a bear market has begun, although my gut instinct leans in that direction at the moment. I would feel more strongly about it if: 1) the mechanical short from 2668.25 goes on to become a big winner; and, 2) the implied downdraft easily exceeds the 2492.75 target. In any case, I will continue to trust my technical runes above all, since they are free of the emotions and dubious citations of fact that are dominating public debate right now. From a practical standpoint, getting a good read on the bull/bear will require paying attention to one simple piece of evidence, to wit: If downtrending, ABC-type corrections start to exceed their 'D' targets, and upward ABC patterns start to fall short of theirs, that would shorten the odds that we are indeed in a bear market. Stay tuned if you care. _______ UPDATE (Feb 13, 8:17 p.m. EST): Despite the bearishness of the analysis above, it's possible to interpret Tuesday's price action

Friday's bounce seemed impressive. However, from a technical standpoint it reminded me of the movie hero who has taken a bullet through the middle of his chest but still manages to sprint to his girlfriend's open arms before dying. In this case the fatal bullet in the chest is the E-Mini S&P's dip beneath the red line, a midpoint Hidden Pivot at 2552.00 that is key to interpreting the chart. Typically, when the midpoint support has been decisively exceeded as it has been here, it means the dominant trend is likely to continue to the next level. That would imply a fall to at least 2464.63, the pattern's 'secondary pivot'.  That is what I currently expect, notwithstanding the fact that the March contract rebounded a spectacular 107 points Friday in under two hours. The chart knows nothing of the hubris and high-fives that swept Wall Street and the news media at the closing bell.  I'll put my money on the chart, though, stipulating that to negate my very bearish target, the futures would have to close for two consecutive days below the red line without having exceeded 2726.75.  Even then I would be reluctant to sound the all-clear, but we'll cross that bridge when we get to it.

The 2609.75 Hidden Pivot target we used to stay ahead of Thursday's avalanche gave way at day's end, implying the plummeting S&Ps probably have further to go, possibly significantly further, before they hit bottom.  I'd suggest using the 2419.00 target shown as a next-to-worst-case target. A fall to that level would equate to a 1700-point plunge in the Dow to 22,000. It will become more likely to be achieved if the red line, a midpoint Hidden Pivot support at 2572.88, is decisively breached. There are two logical, alternative possibilities: 1) the futures reverse from the low they made on Thursday just inches from 2572.88; or 2) the 'secondary' pivot at 2495 eventually breaks their fall.  Any one of the three 'hidden' supports could turn things around, but a decisive breach of one would portend more slippage to the next.  Please note that my absolute worst-case low for this increasingly noteworthy sell-off is 2377.25. It is based on using the highest possible point 'A' on the chart, the record 2878.50 print on January 28.

The E-Minis were up sharply in the first half of Wednesday's session but gave it all back and then some by the close. The fact that this occurred without the futures having exceeded the cliff from which stocks fell on Monday is bearish and implies they will now fall to at least 2609.75. Beware of an interim rally overnight or Thursday morning, since it could be a bull trap. This would become even more likely if the March contract dips slightly beneath 2660.50, Wednesday's intraday low. Many bulls would get shaken out, lightening whatever rally might follow. You should avoid getting enticed. Better yet, you should be prepared to short into a potentially fake show of strength.  Look for me in the chat room if you want guidance concerning this in real time.

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.