The futures were bound for the 5787.25 target shown when the closing bell ended Friday's v-shaped rally. The implied 4.2% gain would put the June contract within shooting distance of old record-highs just above 6200. A move to 5787.25 seemed assured when the trading week ended, since the intraday low occurred precisely on a Hidden Pivot midpoint support. Strong uptrends are supposed to produce weak retracements, according to the rules of my system, and that perfectly describes what happened on Friday. There could be an opportunity to scalp a pullback from p2=5623.00 on the way up, but your trading bias should remain bullish otherwise.
As last week began, rates on the Ten-Year Note looked ready to jump to 4.58% from an already uncomfortable 4.40%. Instead, they eased sufficiently to suggest the trend will continue down to 4.09%, the 'd' target shown in the chart. That might be the most we can hope for, but if the weakness penetrates the 'hidden' support at that level, it could portend more slippage to 4.07%, or even 3.90%. These are somewhat different from the potential lows we were tracking earlier, but the graph looks equally capable of giving us an accurate read over the next 3-5 weeks.
The futures spent the entire week fraternizing with three of four Hidden Pivot levels of the pattern shown. It's peculiar that the bounce from p and p2 missed their respective levels by a tick or two, but there's no reason to think the action at d=5156.75 will be any different, especially since it coincides with the too-obvious low' at 5146,75 recorded on April 10. A Mini-Cooperful of clowns is likely to converge there when it is closely approached, so don't bet too heavily on a precise turn, even if a reversal from near there is likely.
Although the futures have rallied nearly 700 points from last Monday's Hidden Pivot low, their failure to surpass the small external peak shown in the inset was timid behavior. It also set up a theoretical 'mechanical' short at 5406.25 (stop 5529.00) that we'll ignore. Instead, let's give bulls the benefit of the doubt for now, meaning we should expect a thrust above the 5528.75 recovery high shortly. Alternatively, a relapse could send the futures down to as low as d=5038.75 in search of traction (60m, a=5322.00 on 4/4). You could bottom-fish there aggressively with a stop-loss as tight as 2-3 points.
A 4820 target I've billboarded in SPX says lower prices are coming, but that shouldn't discourage us from identifying countertrend opportunities as this vehicle works its way lower. The pattern shown is theoretically suited to that task, but it keeps signaling money-losing 'buys' at the green line. Let's use it instead to tell us when a meaningful bounce might be under way. It will do so by popping above p decisively, but you'll need to adjust p with each new 'c' low to use the pattern effectively. It will be worth the work because any textbook 'mechanical' buy signaled thereafter is very likely to make you money.
Last week's hard selling brought the futures down to the green line, signaling a moderately appealing 'mechanical' buy. The elongated b-c leg sapped some of the bullish energy from this pattern, and so we'll paper-trade this one to see how much moxie bulls have left. A gratuitous poke beneath c=5559.75 can be used to set up a 'counterintuitive' entry trigger of 46.50 points. That's too wide to be practical, so I'll suggest executing the trade with a 'camo' pattern taken from the 15-minute chart or less. I am giving the bull the benefit of the doubt because sellers missed an opportunity on Friday to generate a headline decline. _______ UPDATE (Mar 30, 10:52 p.m.); At the moment, the smallest trigger interval I can come up with for the 'CI' trade is 15.00 points, so this is still a paper-trade unless your 'camo' chops are up to snuff. ________ UPDATE (Mar 31, 3:08 p.m.): The trade produced a profit of as much as $4100 per contract after adjusting for an initial attempt that got stopped out.
Traders spent the entire week screwing the pooch, demonstrating that bulls and bears are equally clueless at the moment. It suggests that the coming bear rally will likely be a tedious affair, about as much fun to watch as the 1893 New Orleans matchup between two determined lightweight boxers, Andy Bowen and Jack Burke. It went 110 rounds before the ref mercifully called it a draw. Will the SEC step in and freeze stocks at a permanently high plateau? My hunch is that the longer this slugfest lasts, the more likely the broad averages will make marginal new highs before a full-blown, take-no-prisoners bear emerges. More immediately, however, you should use 5845.75, the Hidden Pivot target shown in the chart (inset), as a minimum upside objective when the new week begins. It will remain viable as long as traders, entranced by Wall Street's fun-house mirror, don't stop themselves out with a stupid, pointless feint beneath last week's 5650.75 low.
Friday's 101-point thrust came within less than a point of fulfilling the 5649.50 target I'd flagged in the chat room an hour before the day began. I'd said it would take much more than that to produce a bear rally worthy of the name. How much more? Probably another 300 points before bears who have bet the 'don't' line would start feeling queasy. The sassy little pisher that capped the week didn't surpass a single distinctive peak. Still, that's how all memorable bear rallies begin, greeted with skepticism the moment they bolt from the gate. Let's see if short-covering bears have the energy to lift this brick above 3/12's 5675.00 peak as the new week begins. Expect this to happen earlier in the session if at all, since that is when the sleazeball who control the game have the most control over the order book. _______ UPDATE (Mar 17, 12:53 p.m. EDT): The June contract's timid rally this morning just missed taking out a peak at 5726.75 equivalent to the one given above for the March futures. It will do so shortly, however, and will then face a more challenging and less obvious resistance at exactly 5740.25. That is the midpoint Hidden Pivot resistance of this pattern, which allows a bear rally to as high as 5920.50, a back-up-the-truck number for getting short. You can try shorting 5740.25 as well, provided you can handle a 'camo' trigger on the lesser charts. Risk no more than 3.50 points on the initial stop-loss.
The bullish stampede stalled briefly at the 4287.75 target signaled in early May, but the close above signaled more upside over the near term to at least 4331.50, a Hidden Pivot resistance shown in the chart that has been more than two months in coming. There are some additional point 'A' lows that could be used to project an even higher target, but I have not used them because the 'B' high did not exceed any prior peaks. That doesn't necessarily mean the futures can't surpass 4331.50, only that a target above cannot be considered precisely reliable. Please note that a swoon touching either the red or green line, however unlikely, would generate an appealing 'mechanical' buy. ______ UPDATE (Jun 5, 6:43 p.m.): The S&Ps sympathetically weakened when AAPL plunged today, but this seemed scant reason for concern. It happened because too many amateur traders were expecting the long-awaited unveiling of Apple's ridiculously overpriced VR goggles to send the stock soaring. It did, albeit briefly and with help from the usual short-covering panic overnight. However, the subsequent dive was merely classic 'buy-the-rumor-sell-the-news' price action, probably signifying nothing. We'll monitor AAPL closely nonetheless, since the selloff began from a high just nine cents from the 184.86 rally target I'd drum-rolled in the AAPL tout just above. _______ UPDATE (Jun 8, 4:54 p.m.): The trendline shown in this weekly chart has been breached only slightly, but it should not have been breached at all if the rally were about to reverse. The line is authoritative because the two peaks it connects came ahead of precipitous selloffs. If the futures close above the line on Friday or trade decisively above it, that would be yet another warning to bears against fighting the rally aggressively.
Last Wednesday's textbook 'mechanical' buy at x=4120.00 left little doubt where the June contract is headed next. The 'D' target at 4288.75 seems all but certain to be hit early in this four-day week. If it pushes past the Hidden Pivot resistance by more than a couple of points on the first try, you may confidently assume that a new target at 4332.75 is in play. It is derived from the somewhat lower 'A' at 3937.00 recorded on March 24. _______ UPDATE (Jun 2, 9:25 a.m. EDT): The Hidden Pivot target at 4287.75 (a slight correction) still appears certain to be reached. The small delay relative to my forecast occurred because -- manifestly -- too many traders were bullish when the week began. You will have noticed that whatever factors that gave us good reason to be quite bearish are not exactly weighing on the stock market's walnut-size brain at the moment. When DaBoyz fist-pump ES obliviously past 4287.75, you can infer that 4331.50 is the next stop, a slight adjustment from the number given above.
