E-Mini S&P

Since I heard from several subscribers who used Tuesday's tout to get long before the futures blasted off into the wild blue yonder, I've established a tracking position consisting of four contracts with an initial cost basis of 1941.25.  Assuming half the position was exited for a profit at the midpoint Hidden Pivot, 1964.75, that leaves two contracts with an adjusted cost basis of 1918.25. Now, offer a single contract at 1982.25 (p2) while tying both of them, o-c-o, to a stop-loss at  1938.00. You should also plan on exiting the last contract at or near 2002.75, the 'D' target of the  pattern shown. Use a dynamic trailing stop as the target is approached, meaning continually shrink the stop so that it is never greater than a third of what you stand to gain if the target is hit. _______ UPDATE (7:46 p.m. ET): The futures spent the day head-butting the 1982.25 Hidden Pivot resistance noted above, allowing an easy exit from the third of four contracts originally tracked. Now, as suggested here earlier, to exit the last contract, you should use a 'dynamic' trailing stop as 2002.75 is approached, continually shrinking the stop so that it is never greater than a third of what you stand to gain if 2002.75 us reached. If we impute paper gains booked so far to the single contract that remains, it would lower our cost basis to 1854.25, implying a total gain so far of $6325.  Traders who want to get long belatedly for a shot at 2002.75 should try to acquire more contracts with a mechanical bid at p2=1982.25, stop 1975.25. It would apply only after p2 has been exceeded by at least seven  points.

The bullish pattern at the rightmost edge of the chart (see inset) may not look impressive, but there's potentially enough power in it to push this hoax as high as 2008.50 -- equivalent to 600 Dow points -- over the next 4-6 days. What would it take to trigger such an explosive rally? A pop to 1947.00, for starters. That would trip a buy signal that we could transpose to a chart of lesser degree in order to dramatically reduce the initial risk of getting long. Thereafter, if the rally took off, decisively exceeding the midpoint pivot at 1967.50, that would make further upside to the 2008.50 target no worse than an even-odds bet.  All of this remains hypothetical at the moment, however, since there is not yet a point 'C' low in place that we can use to calculate actual Hidden Pivot levels. Even so, a lower point C than the tentative one shown at 1926.50 would not alter my analysis. And if C were to occur just above A, that would set up the kind of back-up-the-truck 'counterintuitive' buy that no subscriber should pass up. Whatever happens, you should keep your focus on the pattern shown, since, trading opportunities aside, it can tell us whether buyers are about to come a-roaring, or roll over and die. _______ UPDATE (March 1, 3:10 p.m. ET): Today's massive rally -- the Dow has been up by as much as 350 points so far -- came from an actual low at 1920.75 that slightly altered the bullish pattern I'd drawn. The entry trigger came at 1941.25, with a telltale push past a midpoint pivot relocated to 1961.75.  The target for this wilding spree is now 2002.75.  Mechanical entries, ideally on charts of 10-minute degree or less, should be considered on a pullback

I've reproduced two months' worth of price action so that can see the wide-open space that will greet buyers if they should try to push this vehicle significantly higher. Technically speaking, only a move to at least 1960.25 looks like a safe call. However, if this Hidden Pivot resistance gives way easily -- meaning within an hour or two of when it is first touched -- that would be strong evidence that still-higher prices impend. Judge for yourself how much supply looms between these levels and record highs a little more than a hundred points above. Most immediately, traders can use a pullback to 1941.88 to get long mechanically, stop 1935.75. If you get to 1960.25, save a contract or two for a swing at the fences. _______ UPDATE (February 28, 7:18 p.m. ET): A 'counterintuitive' buy at 1933.25, stop 1920.00, is the most appealing prospect at the moment -- presumably for Sunday night-owls. You could cut the $650 theoretical initial risk by as much as 95% by using the camouflage' technique. _______ UPDATE (February 29, 8:48 a.m.): Take profits on half near p=1946.25 if you bought multilots at 1933.25 as I'd suggested last night. Single-contract positions can use an 'impulsive' stop from the 5-minute chart. At the moment, that means bailing out on a swoon touching 1937.25. Most immediate objective: D=1951.00, provided p2=1948 (5-min, A=1931.50) is breached to the upside. If and when the futures get there, take a partial profit on  an additional 25% of the original position.

Bears were winning Wednesday's tug-of-war in the early going, but when their heels started slipping and sliding around 1:00 p.m., they were doomed to a dunking in the losers' mud pit. There was no nefarious 'They' or Plunge Protection Team causing this to happen, either, only themselves -- with increasingly desperate spasms of short-covering that swung the Dow 360 points off the intraday low. Those who used Amazon as a telltale as I've suggested might have bailed out around 1:57 p.m., when the stock lurched above some prior peaks on its way to a spectacular, 30-point reversal. At the bell, the futures looked bound for at least 1957.38, a Hidden Pivot midpoint 24 points above Wednesday's settlement price. That's my minimum upside projection for Thursday, but if it's brushed aside, look for the run-up to continue to at least 1992.69, or possibly even 2028.00 over the near-term. Night owls should use the 1946.50 peak that I've labeled to fashion a low-risk entry point if the opportunity should arise.  A bc-type pullback from a point or two above that peak could set up a 'camouflage' entry with the potential to get you aboard with risk tightly controlled.  I've sketched this hypothetically, but the actual trigger would come, not on the daily chart as shown, but on one-  or three-minute bars. _______ UPDATE (2:20 a.m. EST): Asian stocks are getting slammed, tilting the odds in favor of bears. For further details, check  The Morning Line, above. _______ UPDATE (11:21 a.m.): DaBoyz needed to maneuver the futures only ten points lower to exhaust sellers. This was our first hint that today would be a nothing day.  And so it has been so far -- boring and unworthy of our close attention.

Bears caught a breather on Tuesday when the broad averages fell medium-hard after inducing two days of short-squeeze pain. It was hard not to notice, however, that the good guys failed to press their advantage when they had bulls on the run. The futures closed only moderately lower as a result, leaving some in the Rick's Picks chat room lusting for more blood (which, I hardly need point out, is the only way the U.S. economy can ever return to health). Will the tempo of the selling pick up on Wednesday? My gut feeling is that it will take some sort of threatening development on the news front to make this happen. Otherwise, the lunatic stocks that typically lead the broad averages higher, especially Amazon, seem apt to resume their blithe-albeit-doomed bounce from January's oversold lows. From a trading standpoint, this vehicle looked like a coin-toss Tuesday evening. The futures would need to exceed 1881.50 to the downside to offer any further encouragement to bears. However, if they were to trip a 'counterintuitive' buy signal at 'x' like the hypothetical one shown (see inset), I'd say go for it, since odds of a profitable move to p, at least, would be highly favorable at that point.

Hours before the opening bell, on thin overnight volume, DaBoyz short-squeezed this pungent wad of sucker-bait up to the 1940 resistance everyone's been talking about. It's tempting to think that the modest breach of the resistance -- the intraday high was 1943.75 --  will turn into a trap that will snare bulls and bears alike.  With Monday's move above 1940, the futures have opened a more or less unimpeded path to last autumn's highs near 2100.  The prospect is enough to get bulls' juices flowing, but also to put the fear of the lord in bears who for good reason started shorting this flying pig below 1900.  Are near-universal expectations of a runaway short-squeeze sufficient to make it not happen? It's something to consider, since the squeeze scenario seems almost too pat. But I'm not going to let gut feelings get in the way of technical signs that suggest otherwise. See today's AMZN tout for the cold logic behind my assumption that the rally is likely to continue.

The rally sputtered out at week's end just shy of a key resistance at 1940.00. The pullback from a 1933.50 peak has been mild so far, and that is bullish as far as it goes. On the other hand, the resistance remains intact, and we should not presume that it will be exceeded merely because it is there, taunting bulls, as it were. To gauge buyers' resolve after index futures resume trading Sunday night, I'd suggest using the minor, bullish pattern shown, since it meets all of our criteria. An easy and decisive push past p=1924.50 would shorten the odds that the 1950.50 target will be reached. It would also imply that 'mechanical' bids can be used to get long to the target from p, p2, or both.

Denizens of the Rick's Picks chat room are angrier, more despairing and more confused than I've seen them in a while. Although I hesitate to go against the well-grounded pessimism of so savvy a group, gauging the intensity of subscribers' mood swings can sometimes be useful for sorting out the stock market's increasingly vexatious ups and downs. Currently, the broad averages are in their fourth day of a vicious short squeeze, with no clear top in sight. All hell could break loose, technically speaking, if the S&P futures were to pop above 1940.00 (see inset), a key peak within the large, bearish pattern shown. That pattern was pointing much lower last week, when, for reasons unknown, sellers turned tail and dove for cover. The pattern, as well as the bears who shaped it, will be chop suey if 1940 gives way, as seemed likely at Wednesday's close. On the other hand, a spike into the blue could conceivably exhaust bears, fulfilling the one condition that is absolutely necessary for a hellacious downturn. I had assumed that a push above 1940 would all but ensure a test of record highs near 2100. Maybe not, though. If a spike that falls well short of that mark -- say, to around 2025-2040 -- were to occur on a Friday, that could set up a Sunday night surprise, catching bulls and bears alike with their pants down. Stocks in Europe and Asia would need to be falling hard to begin with, but those markets are just as full of hot air as ours and ready to topple. All of this is speculative, of course, but I offer it as food for thought -- and as a reason for bears not to give up just an inch shy of possible vindication and redemption._______UPDATE (February 19,

The large downtrend shown tripped a ‘mechanical’ short on last week’s rally back up to the green line, but I’m going to pass this one up rather than try to be a hero. The first rule of the ‘mechanical’ trade is to initiate them only when you are confident that a ‘D’ target– here 1669.25 — will be reached. In this case, however, although the bearish pattern is well confirmed by the precise bounce from the red line, bears have yet to escape the vicious squeeze begun from last Thursday’s low. Although shorts can still be initiated via ‘camouflage’ using the pattern, since the green-line signal noted above has in fact been triggered, the hourly chart doesn’t look too promising for bears at the moment. Actually, if this short-covering rally continues above the 1940.00 point ‘C’ high of the pattern, after having gone no lower than p=1804.63, it would be warning bears to dive for cover, since, by my runes, a possible test of late December’s highs near 2075 would become no worse than an even-odds bet at that point.________UPDATE (7:02 p.m.): Tuesday's short-covering spree, which peaked at 1992.75, did not change the outlook and analysis given above. The futures would need to dive below 1833.50 today to even hint of possible trouble in Wall Street's delusional Shangri-La.