E-Mini S&P

The recovery phase of Thursday's obligatory swoon was somewhat lacking in vigor, and so the futures ended the day about where they started. The mechanical trade suggested would have been stopped out for a loss of about $750 per contract. Bulls held a nominal edge at the close, if only because the day's gratuitous ups and downs occurred well above Wednesday's bombed-out low. Even so, I'll suggest using the bearish pattern shown to get the jump on Friday's action. It has the virtue of having generated a bounce from the 1870.50 midpoint pivot, confirming the pattern itself. Accordingly, a breach of the actual low at 1865.00 would put the futures on a downward course to as low as 1801.00. That target is unlikely to be reached before next mid-week even if bears are strongly resurgent, but we'll at least have a good idea of how ugly the selling could get if things start to snowball.

Sellers were spent before the opening on Wednesday, allowing DaBoyz to get a running start on the 1953.75 rally target shown. Night owls may have a chance to get long ‘mechanically’ if the futures pull back lazily to the midpoint Hidden Pivot at 1909.25. If so, tie a bid there to a 1894.50 stop-loss and a price objective of 1953.75. A pullback from the secondary pivot at 1931.75 is likely, but if that number offers little resistance, you can infer that odds for a move to D or higher are pretty good.

The 1889.75 target I posted in the chat room at midsession Tuesday's caught the intraday low within three ticks, although only a single subscriber mentioned having used it to trade. The futures have breached it by four points so far during the night session, but it's too early to tell whether bears are going to romp for a third straight day. Rather than guess about it, I'll suggest using an 'impulsive' alert to warn if short-covering has achieved critical mass. In the chart shown, that would imply an unpaused thrust exceeding the 1911.25 'external' peak that I've labeled.  This means that once the rally exceeds the first peak at 1899.25, there can be no significant pullbacks on the 30-minute chart before the futures clear 1911.25. Alternatively, if this vehicle gets hit again, use 1867.75 as a minimum downside projection. You can locate that target on the 30-minute chart using these coordinates: A=1920.50 (2/2 at 8:30 a.m.); B=1889.00 (3:30 p.m.) _______ UPDATE (11:38 a.m. EST):  Both the high and the low targets given above proved precisely relevant for trading purposes, since the futures' range so far has been 1865.00 to 1910.75. Bears obviously lack the moxie to deliver the haymaker at the moment, so we'll have to resign ourselves to yet another day of gratuitous spasms, courtesy of the algos.

The 1939.75 rally target caught the apex of yesterday's bull trap rally within a single tick, allowing subscribers who got long for the ride up, and short for the subsequent ride down, to book a gain of as much as $2000 per contract. The target proved popular, judging from comments in the chat room from subscribers who used it coming, going or both.  Be careful not to pat yourself on the back so energetically that you miss the next turn. As implied by the previous tout, the futures could hit 1971.75 if they get second wind. That would represent a 0.618 upward retracement of January's plunge.  More immediately, the March contract appeared to be the obedient slave of the Hidden Pivot pattern shown. The precise bounce from p2=1917.56 corroborates this, as well as the likelihood of a further fall to D=1914.25 if p2 is breached.  If you stayed short from Monday's high and want to manage the risk of the trade with a fairly generous stop-loss, use 1925.50, where the four-minute chart shown would become impulsively bullish.

Putting aside all of the burble and breathless speculation in the Rick's Picks chat room, there is no reason to get worked up about what is likely to come next. Keep in mind that a simple Hidden Pivot pattern got January's 271-point plunge very right, including a bottom at 1804 that lay  just 13 points from where we'd anticipated. Granted, that's not as close as we are used to, since we often nail the swing highs and lows of big moves within a point or two. However, the fact that the plunge overshot the 1817 support does not mean the pivot didn't 'work'; rather, it told us that the selling is even more powerful than we might otherwise have surmised, and that the bounce is not destined to get very far even if it manages to terrorize bears. The overshoot also tells us that this rally will ripen into an excellent shorting opportunity, particularly if it goes on for long enough to convince permabulls that new all-time highs are coming. How high, then?  The numbers that I flagged when the bounce began still look compelling. The lower of the two at 1939.75, just six points above the peak of Friday's quite vicious short-squeeze, warrants close watching. An easy move through it on Monday or Tuesday would imply more upside to at least 1971.75, which would complete a 0.618 retracement of January's plunge. For purposes of getting short from either level, however, I'd suggest using camouflage -- i.e., a downtrending abc pattern on the 5-minute chart or less. Why employ camouflage instead of simply shorting at the levels themselves with tight stops?  My concern is that these particular retracement benchmarks, both of them all-too-obvious, will be overused by amateurs and the algos, and that they are therefore unlikely to provide the

The pattern highlighted in the chart is gnarly but bullish despite the fact that two days of strenuous effort and grunting have failed to push the futures even to a modest 'secondary' Hidden Pivot at 1908.75. That seems likely to happen today, and if it occurs early enough in the session, further progress toward the 1923.25 'D' target would become an odds-on bet. I'm not even going to bother with an alternative scenario, since sellers seem too enfeebled to offer even modest resistance to short-covering bears. Unless there is news of the most disturbing sort, look for the week to end on a bullish note.

The skepticism that colored my previous tout proved warranted when the futures took a sharp dive Wednesday after head-faking above some prior peaks around mid-day. The rally trapped bulls and bears alike, causing the former to get stoked with short-lived enthusiasm and the latter to panic with a frenetic burst of short-covering. What ensued when the frenzy cooled was a 46-point reversal, equivalent to a 350-point plunge in the Dow.  What will the Smart Guys, aka DaBoyz, do now?  The futures were up nearly 15 points in after-hours trading, goosed by a fresh binge of short-covering on the usual, extremely low volume. Surprise surprise. It smacks of distribution, of course, but that won't be much comfort to shorts who are presently caught in the ringer. When the pressure relents, presumably overnight or early in Thursday's session, my gut feeling is that the broad averages will come down hard. Although we shouldn't get our hopes too high, if stocks are trading in merely moderately positive territory at the opening bell, look out below! Alternatively, in the unlikely event shares push higher, use 1923.25 as a target. It can be found on the 30-minute chart, where a=1851.25 on 1/26, at 5:00 a.m. ________ UPDATE (3:21 a.m. EST):  The nasty, volume-less short squeeze underway at the moment, in the dead of night, projects to exactly 1899.50.

Vigorous as the rally might seem, it is suspect because the "booster stage" failed to exceed last Tuesday's 1907.50 peak.  This suggests that the futures are in a dead-cat bounce, notwithstanding the fact that short-covering could drive stocks significantly higher than we might deem logical before petering out. From a Hidden Pivot standpoint, I am unable to recommend trading the pattern shown, simply because it is not a valid pattern. That relegates traders to the rightmost edge of the chart, where the tiny ABC that I've sketched could conceivably set up a 'camouflage' entry.

The short squeeze that rattled bears so badly on Friday went flatter than an apple in a cider press on Monday. DaBoyz were unable, even, to goose this vehicle above Sunday night's painfully achieved high. The result was a day of tedium alleviated only when the floor gave way in the final half of the session, sending the futures below an 1873.00 target I'd flagged in the chat room.  This hints of more weakness to come, possibly gaining momentum if the usual suspects can't levitate this brick in the early going on Tuesday. The outlook is worsened by bulls' failure Sunday night to surpass the 1907.50 peak recorded a week ago. Based on the foregoing, my current forecast emphasizes the large bearish pattern shown, with a midpoint Hidden Pivot at 1842.63 that can serve as a minimum downside objective for now. As always, a weak bounce from so clear a pivot would portend more weakness at least to the next -- in this case, a secondary (p2) pivot at 1811.81.  Traders can either level to get short 'mechanically' provided our simple criteria for this type of trade are met. If the dam bursts and this sludge-pot falls all the way to D=1781.00, make sure you've been short for at least the last 20 points of the joy-ride if you're keen on bottom-fishing. _______ UPDATE (9:11 a.m. EST): It is the more modest of two downtrending ABC patterns that has prevailed overnight (see inset, a new chart). By sliding the point 'A' high down to the only alternative choice available, we find that the overnight low occurred within 1.25 points of the midpoint Hidden Pivot support, 1852.63. We'll give short-covering buyers wide berth as the new day begins, even though from a 'mechanical' standpoint ES is a moderately appealing short from