E-Mini S&P

Much as I distrust the stock market's buoyancy this week, I have to go with 'technicals' that suggest at least a small rally is coming on Friday. The pattern shown yielded a quintessentially 'counterintuitive' buy signal at the green line, then a belated opportunity to get long 'mechanically' on the pullback to the green line today.  If I were analyzing this chart in a vacuum, with no biases or an inkling of what was going on in the real world, I'd rate the 2168.50 target a lock-up. Even so, as I've implied in the current The Morning Line, you should not let a strong close induce you to take a long position over the weekend. This advice comes straight from the gut, but I will feel no embarrassment if stocks come charging out of the gate on Monday._______UPDATE (Oct 7, 7:18 a.m. ET): The futures stopped out buyers of a promising pattern once overnight and are setting up to do it again with a move below 2148.00. This suggests weakness will finish out the week, although it would be extremely unusual for any selling to pick up steam during the day.  In any event, bears shouldn't get their hopes too high.

The bearish abc pattern shown is the one we should be looking at now, since it's got it all, Hidden Pivot-wise. The p2 secondary pivot at 2110.88 would ordinarily serve as a minimum downside objective for the near term, but my strong gut feeling is that the futures will dive straightaway to d=2090.25 if they crack the midpoint support at 2131.50.  I've used lower-case coordinates for the downtrend simply because there is a larger, bullish ABC pattern in effect. It would take quite a plunge to invalidate it -- the equivalent of about 1400 Dow points -- but this is October, after all, the market is in loonie-bin territory, and I lack the imagination to speculate on what could conceivably keep the broad averages buoyant. The world is falling apart, so why shouldn't the stock market start reflecting this?______ UPDATE (Oct 5, 9:26 p.m. ET): No change in my outlook or analysis.

Much as we might wish for Friday's rally to have been a one-day fluke, the buying generated a robust impulse leg on the hourly chart that bears will have to reckon with when the new week begins. Any short-covering is likely to be subdued, however, since many traders and Wall Street denizens will be observing Rosh Hashanah, the Jewish New Year, from Sunday evening until Tuesday evening. (Subscribers please note: Rick's Picks will not be published on Tuesday for this reason.) In any event, you should use the ABC pattern shown to gauge the strength of any buying. It seems unlikely that DaBoyz will try for new record highs on Monday or Tuesday, but we shouldn't be surprised if they position the broad averages for a short squeeze that accomplishes this on Wednesday.

I wouldn't write off The Bull That Wouldn't Die quite yet, since its institutional sponsors are still hard-wired to unlimited free money. But with the key reversal yesterday of our number one bellwether, AMZN, it seems likely that the broad averages will have to go at least somewhat lower in order to get a running start at new record highs. It is beyond my imagination to envision a news environment in which this could occur. However, we must still allow for it, since a bear market in stocks would set in motion a series of events that are unthinkable -- that could only lead to a Second Great Depression.  The Powers That Be have held the inevitable implosion at bay for nearly a decade, but this has required increasing amounts of stimulus that have by now lost their punch. It is a measure of the folly and delusion rampant in the financial world that Japan evidently thinks it can power its way out of the deflationary black hole with yet more stimulus. Even the benighted spinmeisters in the news media no longer seem to believe this is possible. From a technical standpoint, the futures look bound for the 2090.25 target shown.  There are at least a dozen ways to trade this, from both sides of the market. Stay tuned to the chat room if you care, since the E-Mini's have been garnering considerable attention lately. As always, if so clear and important a Hidden Pivot support as 2090.25 fails easily, that would be signaling more than a mere squall ahead.

The futures haven’t come this far since September 12’s bombed out lows only to recede without hitting new record highs. However, the 2182.50 target shown would leave them a hair shy of that threshold. Expect a stall at that Hidden Pivot, but probably not much of one.  The ease with which buyers push past it will tell us how eager they are to keep chugging higher. For starters, I’d use 2197.75, a resistance that is likely to prove more challenging than the heavy supply zone created by six weeks of tedious chop in August and early September. Incidentally, are you watching AMZN, as I had suggested? No way this bull is going to die as long as the megaretailer’s shares are on a wilding spree.

I've reflexively used a not-so-distinctive one-off 'A' to project minimum downside to the 2134.25 midpoint support shown, but if there's no bounce from that number, look for it at 2131.50, an alternative Hidden Pivot calculated from the 'marquee' high at 2182.75 recorded on September 8. The futures showed little pluck on Monday, ratcheting slowly over the course of the day to within less than a point of a minor, 2138.50 target I'd disseminated in the chat room early in the session. Sellers eventually put in a low at 2136.75, and although that's not enough of an overshoot to ensure significantly more downside ahead, neither is it exactly a sign of good health.  At any rate, 2131.50 had better hold, since a decisive failure there would put a 2090.25 downside target in play. That is the target of the pattern shown, but drawn from the highest high rather than the one-off.________ UPDATE (Sep 27, 12:24 a.m. ET): The futures have unaccountably taken a Whoopee Cushion bounce tonight from 2133.25, a low that lies within the narrow range between the two Hidden Pivot supports noted above.  At the moment, buyers have stalled at the exact, 2153.88 midpoint resistance of a rally pattern projecting to 2174.50 (A=2131.50 at noon on 9/21). A decisive push past p would put the 2174.50 target well in play. It lies just inches from new all-time highs._________ UPDATE (11:17 p.m.): Zzzzzzzzzzzz. Today's gratuitous spasms lowered the target to 2174.00, the midpoint resistance to 2153.38.

With no Fed policy pronouncements on the calendar Friday, I was still unprepared for the stock market's deadly dullness. The broad averages spent the day ratcheting lower, bottoming near the peak of last Wednesday's spike rally.  They remain within easy distance of record highs nonetheless, and it would be most surprising if DaBoyz didn't take a shot at those highs in the week ahead. Not necessarily on Monday, though, unless the energy and inspiration typically lacking on Mondays is unexpectedly switched on by some interesting headline Sunday even. (Fat chance in this hellish election year.) The rightmost edge of the chart is slightly bullish, owing to the impulse leg created on the hourly chart at Thursday's high. Night owls can use the pattern shown to fashion a long-entry signal, which would become more enticing if the eventual point 'C' low occurs very close to the prospective 'A', in the range 2153.50-2155.00. _______ UPDATE (9:59 a.m. ET): Use 2138.50 as a downside target for now (a=2155.75 at 1:15 a.m. ET).  Alternatively, the two-minute chart would swing bullishly impulsive on a print exceeding 2146.50.

Short-covering on Thursday shredded a clear Hidden Pivot resistance at 2162.25, implying higher prices are likely. Bulls will face a daunting challenge, however, in the form of supply that stretches back to early August. Most buyers since then would have gotten aboard at or near record highs and weathered the one-day plunge that occurred on September 9; many of them will be understandably eager to get out 'even'. That's why there will be plenty of stock offered for sale as the week draws to a close. However, bears alarmed by the persistence and ferocity of the rally since the v-shaped low two weeks ago are probably even more eager to cover short positions, and that's why I expect the old record highs to be surpassed. If this is in fact how things unfold on Friday, there should be discernible resistance nevertheless at the 2182.94 'secondary' pivot shown in the chart as a pink line. However, a close above it for two consecutive bars, or a decisive move past it intraday, would put the futures on course for a romp next week to the 2210.50 target, or to 2226.50 if any higher. Either of those two Hidden Pivots would make for an appealing place to try shorting ahead of a possible Mother of All Tops. We've made money being wrong on this bet many times in the past, and caught some exhilarating but short-lived downdrafts. Ask traders about this in the chat room if you are skeptical. In the meantime, there is potentially as much as 60 points of upside to get long, presumably using 'mechanical' bids and/or camouflage entry tactics at p or p2 -- respectively, the red and pink lines.

Bulls continue to hold sway, although they could never be accused of muscling the futures around on Tuesday. It was just more vamping ahead of whatever announcement the Fed has in store for traders on Wednesday. A press release is due out at 2:00 p.m. ET, and although no one could have any doubt about what's coming and what the perennially dithering Open Market Committee intends, the opportunity to push the broad averages higher on any 'news' at all is unlikely to go unexploited. The announcement will be bullish ostensibly, since we've been hearing for a month about how tightening 'might' come in September. Apparently not, not that it matters. Night owls please note: With the tightest stop-loss you can handle, try bottom-fishing at the 2124.50 target of the small abc pattern from Monday's high._______ UPDATE (Sep 21, 12:08 a.m. ET): Tonight's weakness reversed from within a tick of the 2129.25 'secondary' pivot of the pattern alluded to above: 60-minute, a=2146.75 (9/19); b=2127.75; c=2143.50. The 2124.50 correction target is still valid, but it will become less enticing if it is not hit within the next few hours. _______UPDATE (Sep 21, 10:18 a.m.): The futures never quite got down to 2124.50; the overnight low as 2126.25. The expected rally that has ensued is targeted on 2154.25, shown in the original chart from two days ago (see inset). _______ UPDATE (5:14 p.m.): Check my posts in the chat room, beginning with the one at 16:56, for trading guidance on Thursday._______ UPDATE (Sep 22, 9:39 a.m.): Buyers turned double resistance at 1259.75/1262.25 into chop suey, threatening to extend this short squeeze until the very last bear has been flayed and turned into a rug.