E-Mini S&P

Friday's plunge did significant technical damage to the E-Mini S&P's daily chart. The last time this occurred was ostensibly due to Brexit hysteria and all of the scare-mongering by one-worlders that attended the vote. This time, however, stocks fell for no apparent reason, and that should be worrisome for bulls, since it suggests that cyclical forces are at work that could spell doom for a bull market currently in its 90th month.  As you can see in the chart (inset), the steep selloff exceeded no fewer than five 'external' lows, two of them major, without an upward correction. This implies there is very considerable power driving the selling and that it is likely to continue following whatever upward correction awaits.  If the bounce occurs from somewhere above the 2057.50 low labeled in the chart, it could conceivably generate a 'counterintuitive' buy signal that day- and swing-traders could use. However, we'll need to monitor the bounce closely on the lesser charts, since a failure to push past even a minor 'midpoint Hidden Pivot' resistance would be warning that the larger downtrend is still in effect.

The futures have become so perfectly predictable that a tone change in the days ahead seems all but assured. Thursday's price action replicated the forecast sent out the night before almost exactly: a marginal new high overnight, followed by weak selling early in the regular session, then a feeble rally into the close. The 2167.00 target shown (see inset)  can be bottom-fished with a 2167.25 bid and a stop-loss as tight as three ticks. The trade will likely work best for night owls, especially if the target is reached in the early evening. ______ UPDATE (September 9, 10:07 a.m. EDT):  How delightful! The futures are experiencing a rare selloff this morning, having traded as low as 2150.50.  Although they crushed the 2167.00 Hidden Pivot support where I'd suggested that you try bottom-fishing, it took them three hours to do so. They rallied to 2169.50, the 'secondary pivot, over that time, so scalpers could have come away with a small profit before bulls finally gave up the ghost.

DaBoyz have returned from the Hamptons, only to hit the ground crawling. With today's dirge, they've succeeded in extending the summer snoozefest yet one more day. Doubtless, they are waiting for some momentous announcement about imminent tightening from the Fed. Even if the announcement doesn't come, the hacks who report the news seem to have bought into the rate-hike scenario wholeheartedly and are eagerly complicit in Yellen's embarrassing attempts to 'manage' our expectations. None of this changes the ostensibly bullish picture of the E-Mini S&Ps' daily chart. I say 'ostensibly' because the slope of the rally toward a 2299.00 target is so subtle that it could take another eight months to get there if the pace doesn't pick up. Although a serious correction is long overdue, there is nothing in the chart to suggest the target will not be reached. The August 2 pullback to the red line provided a perfect 'mechanical' buying opportunity that never challenged bulls even slightly, and the 2217.31 'secondary pivot' looks, if not quite like a lock-up, then at least no worse than an even-odds bet to be reached. More immediately, traders can use this pattern on the 15-minute chart to get long overnight with just three ticks of theoretical risk: a=2180.00 (9/7 at 10:45 a.m. EDT); b=2170.50; c=2178.75 (4:00 p.m.). Assuming point 'c' has not been exceeded, you should bid a tick above p=2174.00, stop 2173.50. You'll be on your own if this one fills, but the three-tick initial stop-loss implies a partial-profit-taking opportunity at 2175.75.

Friday's modest rally, fueled by meaningless non-farm payroll data, was bound for 2191.25 (see inset) when the bell rang. This target roughly coincides with an important midpoint resistance at 2189.25 associated with a larger pattern that projects to as high as 2236.75 (60-minute, A=2082.00 on 7/7). That implies double stopping power near 2190, and any rally that exceeds this number is to be presumed backed by considerable buying power.  Still more bullish would be a two-day close above 2189.25, an occurrence that would make a further push to 2236.75 an odds-on bet. I'll switch to the relevant chart when appropriate, but your trading bias for the time being should be bullish. _______ UPDATE (September 7, 4:55 p.m. EDT): No change. The minor, 2191.25 target given above is not only still viable, the odds have increased that it will mark a top of at least short-term importance that could be precisely tradable. This is implied by Tuesday's stall a half-tick from the 2186.38 'secondary' pivot shown in the chart. If you've been long for the ride north, use your profits to cushion a generous stop-loss when you reverse the position at the target. Remember, any minor rally target could mark an important top, and that's why opportunities like this one should be exploited aggressively, albeit with entry risk very tightly controlled.

We have a rally target at 2203.75 outstanding, and another at 2236.75, but I doubt we'll see any movement ahead of the weekend that is commensurate with such ambitious price objectives.  More likely is further chop between the green (x) and pink (p2) lines, with a worst case of 2148.25 if the futures should shock us with a serious selloff.  'Mechanical' shorts have been working about two-thirds of the time, but we'll wait for better odds before we attempt trading in either direction.

The selling reversed from within a hair of the 2160.31 'secondary pivot' flagged in the chart that accompanied yesterday's tout. This is a tentatively bullish sign, but it would take a further push exceeding last Friday's 2186.75 peak to suggest that buyers are back on the offensive. If they do regain their footing, you can use the pattern shown to get a precisely tradable handle on the rally. You'd be shooting for a minimum 2203.75, with three possible 'mechanical' opportunities to get long on pullbacks to x, p or p2.

The pattern shown, with a minor downside target at 1302.70, looks like it will provide the most useful perspective for the very near term.  Neither the midpoint pivot nor the secondary (respectively, the red and green lines) showed any discernible support, and that's why I expect the selling to continue down to at least 1302.70. Also, the midpoint pivot produced a would-be profitable 'mechanical' short, as I expect the secondary pivot at 1313.20 to do now. We can worry about the seriousness of this presumptive correction, now in its third week, if and when 1302.70 is easily or decisively exceeded. Were that to occur, the futures would be likely to grope their way down to 1259.10, the June 24 Brexit launching pad, in search of good traction. _______ UPDATE (September 1, 12:01 a.m.):  No change: The analysis provided above can stand as is.

There are numerous bullish ABC patterns of various size driving this rally, but I've selected one of middling importance for now because the futures have stalled at its 2180.25 midpoint pivot. A decisive penetration of this resistance to the upside would shorten the odds of a further push to the 2303.00 target. Levels x, p and p2 could all conceivably be used to get long 'mechanically' if the opportunity should present itself, but there is one further possibility: buying on a pullback to 2167.50, the midpoint Hidden Pivot support of the downtrending abc pattern labeled in brown. ________ UPDATE (August 30, 5:24 p.m. EDT):  I'm going to leave this dog in the yard overnight without food or water, since its behavior could use some improvement. After topping inches above the 2180.25 pivot flagged in my tout, the futures fell to a low 1.00 point above the 2167.50 pivot where I'd suggested placing a stink bid. As a result, unless you used 'camouflage' tactics to get aboard, you would have missed the trade. Now, assuming the futures take the path of least resistance, they'll continue lower to the 2153.00 target shown.  I am temporarily out of patience for the little sonofabitch, but I would encourage you to use the pattern displayed to trade this vehicle knowledgeably. You'll have the opportunity to make whatever small adjustments might be needed in real time, versus trying to do so with guidance disseminated overnight. As always, if sellers exceed so clear a 'D' target, it would have bearish implications going forward.

Friday's gratuitous Yellenspasms slightly altered the bullish pattern we've been using, lowering the target by about 8 points to 2203.00 (see inset). The futures touched the green line late in the session, tripping a theoretical buy signal, but I'd suggest waiting for a more appealing opportunity to get long. That could come in the form of a 'mechanical' bid on a pullback to at x, p or p2, provided you know what you're doing. If not, you can always monitor chat room discussion about this, since there will usually be a half-dozen or more traders in there who are adept at this type of entry.