E-Mini S&P

Amidst Thursday's constipated tedium, the futures never quite got airborne. As is so often the case, they made a key high outside of regular hours, at 11:00 p.m. Wednesday night. After screwing the pooch for the next 14 hours, the March contract somewhat exceeded the overnight high, although not by much. This could hardly have inspired bulls; however it is not bulls who are doing most of the buying these days, but short-covering bears. Are they anxious enough to send the futures into a short-squeeze rally? My hunch is that they are not quite there, but that they are nervous enough to prevent stocks from falling by much as the week draws to a close. In any event, traders should approach this rabid weasel with a moderately bullish bias, given that the afternoon session produced the bullish AB impulse leg shown, along with the beginning of a potential CD leg that could hit 1894.50. That would be no big deal, but if it happens just before the final bell, or if the target is exceeded on a closing basis, the pressure would remain on bears when index futures resume trading Sunday evening._______ UPDATE (9:50 a.m.):  Rarely failing to leave us unsurprised, or to catch us totally awares each day, ES has rallied 26 points so far, to within three ticks of the 1894.50 target that I posted here last night. You could have made as much as $1300 per contract by being long.  Now, use your gains to provide a generous stop-loss on a short from near the highs.

Was that fun, or what! Wednesday's exhilarating plunge bottomed near an 1817.00 target that has been in play since November. Pivoteers had some excellent opportunities to make hay, starting with a bearish call that went out to subscribers at 8:47 p.m. the night before. The March contract was trading for around 1862 at the time, and a short from those heights could have produced a gain of as much as $2900 at Wednesday's lows.  Moreover, nimble traders could have picked up an additional $1150 on the way down, since the futures took a 23-point bounce in the dead of night from 1829.25, precisely to-the-tick where I'd told subscribers to expect a rally of presumably fleeting importance.  When the dust settled after Wednesday's close, the March contract had traded as low as 1804.25 -- 12.75 points beneath the longstanding target at 1817.00. Although this was not much of an overshoot, it was sufficient to do serious technical damage to the long-term chart. Specifically, it breached a key low from October of 2014, generating a fresh, bearish impulse leg of weekly-chart degree just as the futures were completing a bearish ABCD pattern begun back in July. The implication is that this rally is doomed and likely to offer traders an excellent opportunity to get short yet again.  For further guidance in real time stay tuned to the chat room, where traders have been using Hidden Pivots aggressively and with increasing skill.

Although predicting whether stocks will rise or fall on a given day has been no better than a coin-toss bet lately, sellers seems very likely to prevail in the months and years ahead, given the high likelihood that stocks have entered a bear market.  More immediately, the pattern shown (see inset) is so marginally bullish that the contrarian in me wants to give bulls the benefit of the doubt for Wednesday. A theoretical buy signal was tripped at 1870.71, implying traders could buy there, stop 1856.00, and shoot for 1914.50. Instead, however, and less risky, would be to employ a 'mechanical' bid at p=1885.40, playing for a pullback once this Hidden Pivot has been exceeded by perhaps 5 points.  The stop-loss thereof would be at 1875.50. ______ UPDATE (8:47 p.m.): This evening's rally has reversed sharply, presumably for reasons having to do with Wall Street's current obsession with China. Use p2=1848.81 as a minimum downside target, with D=1829.25 possible if p2 gives way. ______UPDATE (9:24 a.m.): My 1829.25 target caught the exact low, to-the-tick, of a 40-point plunge overnight.  A short initiated at the time of the post would have been worth as much as $2000 per contract; and a long from the low an additional $1400 per contract, since the bounce has gone as high so far as 1847.25. (9:40 a.m.: ...and now to 1852.50, worth as much as $1600 per contract on the long side.) _______UPDATE (10:50 a.m.) Events are unfolding at such a pace this morning that I can barely keep up with updates for a half-dozen vehicles that, for the most part, are moving precisely-to-target.  Now that ES has crashed the 1829.25 Hidden Pivot, my longstanding, major target at 1817.00 is obviously in play. I expect a tradable bounce from that number, but if the bounce

A longstanding downside target at 1817.00 remains valid, although last week's timid rally may have further to go before the correction has run its course, especially if crude oil prices rally this week. The futures would become a 'mechanical' short from p2=1888.50, stop 1897.75, but we can reduce the initial risk significantly by using a 'camouflage' entry once 1888.50 is touched. This implies waiting for a downtrending, tradable abc pattern to develop on a chart of minor degree. The tactic is recommended only to those who are familiar with it, but you can seek real-time guidance in the chat room if the opportunity develops. Another possibility would be to short the minor rally target show in the inset, although it may prove to be too delicate if the new week starts with a bang.  One further possibility: Ahead of the short trade, night owls can use the 'camouflage' pattern shown to get long at 'x' if the set-up ripens more or less as drawn. ______ UPDATE (1:45 a.m.):  See my 21:09 post in the chat room for timely guidance on this rally.

Gold's failure last week to extract much benefit from Wall Street's severe jitters should be viewed as a sign of weakness. Regardless, the February contract was in a minor bullish uptrend at the bell, so we'll give it the benefit of the doubt for the moment. A positive start to the week would require a decisive thrust above the midpoint resistance at 1095.40 (see inset). That would put the 1104.20 target in play, but the short-term outlook would become even brighter if the futures can hold above 1099.80. That is the midpoint pivot of a larger, bullish pattern begun from 1056.50 on December 31 that projects as high as 1127.70. ______ UPDATE (January 19, 8:34 p.m.): Tuesday's gratuitous swoon lowered my immediate target to 1099.70, subject to p and p2 resistance at, respectively, 1090.90 and 1095.30. 

Now wasn't that rally special! Our friend Mike Schurr alerted me Wednesday night to the pattern shown, instantly solving the mystery of why the futures were refusing to go any lower despite evidence that the world economy is rapidly going to hell in a hand basket. Buyers briefly changed their deranged minds in the early going Thursday morning, surrendering the modest gains they'd achieved in thin markets overnight. But when they caught a whiff of bull manure emanating from the energy patch, where crude was in the throes of a dead-cat bounce, the short-squeeze on Wall Street was off and running. It may have seemed impressive at the time, but notice that it didn't come even remotely close to surpassing any peaks of significance, even on the lowly hourly chart (inset). Another short-covering hoax?  Yes, probably. Even so, we'll stand aside Friday and let it do its thing, since you can never tell what kind of craziness will seize the proletarian mind ahead of a three-day weekend. My gut feeling is that the bear market is still too young to be generating the kind of short squeeze rallies that will cause bears to pull their hair out. Whatever happens as the week draws to a close, the Rick's Picks chat room will offer a ringside seat and technically illuminating, if aggressively biased, running commentary. Click here for a free trial subscription that will let you join the fun for two weeks. _______ UPDATE (10:20 a.m. EST): The broad averages are getting crushed this morning, reversing the phony exuberance of an overnight short squeeze. What a delightful end to the week! U.S. stocks have evidently become completely subservient to the ups and (mostly) downs of Chinese stocks, and to news concerning the yuan. A small devaluation last night has caused the Dow

Short-covering persisted for a second straight day, but it was too feeble to count as a clear victory for bulls. We'll stay out of their way for now nonetheless, but that doesn't mean we can't try to intercept with short offers in opportune spots.  The pattern shown, for example, encourages a try at 1951.00, although p and p2 can also be used to get short if you do so via 'camouflage'.  Essentially, this means waiting for a (very) minor, downtrending abc pattern to trigger you aboard once the actual Hidden Pivot has been touched or closely approached to the upside.  Because the rallies are so lacking in vigor, we should look to get short at every possible opportunity. In the chat room, some are doing this instinctually, others by-the-numbers. Tune in during the regular session for interesting ideas in real time. Consider trading from the long side enroute to rally targets, since that will provide a cushion for your stops when you lay out shorts.

Using the same chart as the one shown, we'd been expecting the futures to come down to exactly 1888.44 before launching into a corrective rally worthy of our attention. On Monday, sellers drove this vehicle down to 1892.50, four points from our target. Is that close enough for us to infer that sellers are done pummeling the S&Ps for now? The jury is still out, but I have my doubts that the selloff will abate for more than a couple of days.  In any case, the chart I've reproduced today inverts our recent, bearish point of view to focus on a lesser uptrend that can help us assess the eagerness of buyers if Monday's weak short-squeeze rally should turn vicious. Specifically, the rally would need to hit 1954.88 to trigger a theoretical buy signal; and to exceed 2017.25, the midpoint Hidden Pivot of the pattern, to give bears serious reason to worry.

With stocks falling hard, this vehicle has moved very predictably and precisely to Hidden Pivot targets broached here in the past week. On Friday, for one, a bull-trap rally an hour before the opening topped to-the-exact-tick at a Hidden Pivot resistance I'd billboarded with this post in the chat room: "ESH has just popped psychotically through p=1951.38, [making] D=1964.75 a certainty."  Ten minutes later, the futures in fact made their intraday high at 1964.75. Anyone who got short there could have reaped a windfall, since the futures fell for the rest of the day, hitting a low at 1910.00 that would have been worth as much as $2650 per contract. That low lay just a single point from the bearish target at 1911.00 that I'd disseminated the night before as a minimum downside target. Now, my gut feeling is that this Hidden Pivot support will fail on Monday, sending the futures down to an 1888.44 target that I sent out at the same time. "Mechanical' shorts from 1911.00 are advised, but only if you understand the simple rules that govern this type of trade. Stay tuned to the chat room for guidance in real time. if you'd like to learn more.  Please note that if 1888.44 gives way easily, the futures are likely to continue falling until 1817.00 is reached. At that price -- a screaming buy, as far as I'm concerned --  the futures will have shed 13.5% of their value since topping in early November at 2102.75.