E-Mini S&P

Judge for yourself the weight of today's decline relative to the 2169.25 rally target (see inset). Of course, a small loss in momentum could always snowball into a rout. For now, though, I'll stick with my forecast of a run-up to the target within the next 5-8 days. Alternatively, it would take a 74-point drop, to below 2022.00, to invalidate it. Tuesday's moderate selloff did generate a weakly bearish impulse leg on the hourly chart; however, it would take a further fall to 2082.25 for bears to inject a note of menace into the immediate outlook. Please note as well that the E-Minis have been moving in lock-step with crude oil prices, and that my forecast for the latter remains bullish up to a 51.49 target, basis the July NYMEX contract. That's 2.56 above the last settlement price, implying there's still plenty of upside -- not just for crude, but for its current bitch, the U.S. stock market. _______ UPDATE (June 1, 10:08 p.m. EDT): Wednesday's gratuitous swoon changed nothing in the immediate picture. As noted above, a 2082.25 print would be needed to hint of trouble. The day's low occurred at 2083.25, instructing us that the machine traders are looking at the same support. As such, with a fan club of sorts, it has become even more important.  _______ UPDATE (June 2, 11:32 p.m.): DaBoyz sprung a nasty trap on bears in the early going, goosing this vehicle for a nearly 20-point gain with little in the way of pullbacks. All of this changed nothing in my very bullis, short-term outlook, which is given above. Non-farm payroll numbers are due out today, and although the stock market is likely to act as though it cares, it's almost inconceivable to me that anyone actually does.

As always, the strongest rallies are being driven entirely by short-covering. Even so, it can sometimes take a few days to goad bears into stampeding anew. Usually, the latest drivel from the Fed will suffice to trigger a panic that sends stocks into wild spasms. Something has changed, however; for it has become clear over the last few months that it no longer matters whether the news is ostensibly bullish or bearish. Whatever the headline, the resulting movement of shares has invariably been upward. Which brings us to the chart accompanying this tout. Although two days of dithering have failed to push the futures past the red line, a crucial resistance that I refer to as a midpoint Hidden Pivot, there should be little doubt that buyers will punch through it either today or Monday. If and when that happens, I'd lay 4-to-1 odds that the futures will hit the D target at 2169.25 within the next 5-8 days, if not sooner. That would be equivalent to a Dow rally of about 650-700 points. Traders who are familiar with my Hidden Pivot Method may have noticed that the stall the last two days has occurred just shy of the red line at 2095.63 rather than precisely at the line as we might have expected. This is probably because of the 'twin peaks' resistance posed by a double top near 2094 in late April that began a month-long decline. That makes these tops a relatively important obstacle. Once they are exceeded, however, it will be clear sailing all the way to 2169.25. If the rally smashes through the pink line, a 'secondary Hidden Pivot at 2132.44, within the next 3-4 days, it would likely be steep enough to suggest that a blowoff top is in progress. Whatever the case, we should

The quirky rally pattern shown is the one I'm suggesting you use for now, since it allows sufficient room for more frivolity like Tuesday's. If the 2115.00 target is achieved by Thursday or Friday as I expect, it would equate to an approximately 300-point Dow rally. Judging from the way buyers impaled the red line, a midpoint Hidden Pivot at 2068.50, I'd say the odds of a follow-through to the target by week's end are around 80%. That means x, p and/or p2 can all be used to get long 'mechanically'.  If you do so at p, a 2053.00 stop-loss would be required; if at p2, the stop would be at 2084.00; and if at x, then 2021.75. You should attempt this trade only if you completely understand the rules governing 'mechanical' entries. One further note: 2115.00 is by no means a likely terminus for this rally. Using the 1958.00 low recorded on March 10 as an alternative point 'A' low yields a rally target of 2169.25, with midpoint resistance at 2095.63 and a secondary pivot at 2132.44. This lower point A is far more compelling visually than the one at 2012.25 shown in the chart. _______UPDATE (May 25, 7:06 p.m. EDT): Today's Whoopee Cushion rally left my analysis and forecast (see above) unchanged.

We can dispense with Hidden Pivot targets for the moment, since the trendline in the chart (see inset) looks good enough to guide us.  Looking just ahead, although the nasty short-squeeze off Thursday's lows ran out of steam on Friday, look for it to get second wind for a thrust to the trendline. It will make itself felt at around 2059 if the futures get there by mid-day, and I'd be surprised if it gives way the first time it's touched. If it does, however, take it as a sign that DaBoyz mean business and that they are fixing to torture bears for at least a few more days. _______ UPDATE (May 23, 7:08 p.m. EDT): Zzzzzzzz. The trendline noted above will be felt at around 2057.50 midday if this brick should somehow rally. If not and it falls, look for a precise test, potentially tradable, of the midpoint pivot, 2032.48. An easy breach of the support would imply more slippage over the near term to at least p2=2020.38, or, worst case, to D=2008.50.  Use these coordinates on the 15-minute chart to recreate the pattern: A=2069.50 (5/17); B=2022.00 (5/19); and C=2056 (5/23). _______ UPDATE (May 24, 9:35 a.m.): The short-squeeze rally begun in the middle of the night stalled initially at 1258.00, which I would surmise is exactly where the trendline has come in at this hour of the day. At the moment, a second-wind thrust to 1259.25 has occurred.  Let's wait and see by how much the trendline is exceeded intraday; and whether the futures can close above it, which would be undeniably bullish.

One small step for mankind, sort of. When yesterday's headless-chicken dance subsided, the futures had inched a few satisfying steps closer to the bearish target at 2016.75 that we've been using on good days and bad lately. Even if this Hidden Pivot has not been of particular value to day-traders, it has at least kept us from waxing exuberant every time this flying pig's snout poked above the water line. The target remains valid, although I can offer no easy plan tonight for getting short. If you manage this feat on your own, step up the size when you reverse the position and go long at 2016.75. An initial stop-loss of 1.00-point would ordinarily suffice, but the target has been on the billboard for so long that it might need a little more room. ________ UPDATE (May 19, 8:18 p.m. EDT):  No change in my current guidance.

If you could smell distribution, yesterday's price action reeked worse than dead trout after it has been basking in the sun for a few days. There was no cleverness about it either, let alone something to admire. DaBoyz simply popped the futures the obligatory few ticks above the previous day's high in the dead of night, stopping out any bears lacking in either cunning or daring. From that point on it was all downhill, ostensibly because there were few bears left to cover short positions. From a technical standpoint, I still like the bearish pattern shown, with an easy-as-pie target at 2016.75 that we've been using for a week. For your information, a 'mechanical' short from the green line would be showing a thousand-dollar profit on initial risk of $800. Additional gains of $1400 per contract are possible if the 2016.75 target is achieved, as I expect it will be. Traders can use a 'mechanical' tripwire at p or p2 to get short, but only if you understand how such trades work.  Tune to the chat room for guidance in real time, since there are usually at least a dozen traders in the room who really know what they're doing.

Monday's short-squeeze rally would turn menacing with a print at 2093.75, a tick above the peak labeled in the chart. That would be equivalent to a 250-point Dow rally, which is well within the realm of possibility for a stock market that should probably be trading 10,000 points lower. The bearish Hidden Pivot target at 2016.75 will remain theoretically viable until such time as the point 'C' high at 2079.75 is surpassed, but you should have a damned good technical reason for getting short if you plan to leverage the pivot. There's no point in my going out on a limb here with an overnight trading 'tout', since it would be like trying to predict which way a cockroach will scuddle when the lights are turned on.

The quite-bearish, 2016.75 target that I sent out Thursday night still looks good, as does the punitive ABC pattern from which it was derived (see inset).  The futures fell Friday by only 40% as much as I'd projected, but they looked so bad in the process that we can be confident sellers will finish the job when trading resumes next week.  For the record, my guidance missed the best trading opportunity of the day, since, just to be extra cautious on a Friday, I suggested a 'mechanical' short from any Hidden Pivot level other than 'x'.  When the dust settled on Friday, however, it turned out that a short from 'x' was the only 'mechanical' entry that would have worked -- perfectly -- based on the current pattern. In any case, p2 remains as a potential spot to get short belatedly provided you know how these trades work. Let me emphasize yet again that the decision concerning whether to initiate a mechanical trade rests on one judgment and one judgment alone: the confidence that a trading vehicle will reach its D target come hell or high water.  Yes, the decision is therefore subjective. But if you just 'know' in your gut that a D target is going to be achieved, then you will make money on mechanical trades as often as that gut feeling is correct. A learned instinct, to be sure. Fortuitously, some patterns, to me at least, have 'D' written all over them. The more such opportune patterns you are able to recognize, the more remunerative your time spent trading will become.  The salient advantage of the mechanical trade is that once you have committed to it, there are no more decisions to make, since stops and risk management are automated and strictly by-the-numbers from the entry point

The bounce precisely from the red line has confirmed the pattern and its bearish target at 2016.75. If it's achieved, the implied 35-point drop would be equivalent to about 300 Dow points.  The futures have relapsed to the red line so quickly following yesterday afternoon's rally that the line's decisive breach seems likely. If it happens, subscribers could attempt to get short 'mechanically' at either p or d (but not x this time) on an upward retracement to either of those Hidden Pivots once they've been exceeded decisively for three consecutive bars. If you're not sure how these trades work, stay tuned to the chat room, where there are many subscribers who qualify as experts on the tactic.