E-Mini S&P

Bears' inability to deliver a knockout punch yesterday left them struggling for the entire session to make even modest progress toward the two downside targets shown.  They would become slight underdogs if the weak short-squeeze in evidence on Wednesday punches past peaks #1 and #2 (see inset), particularly in the early going.  Not being clairvoyant, I won't hazard a guess about which way this Punch 'n' Judy show will go on Thursday. If the broad averages turn significantly lower, however, use the 1952.25 target flagged here the other day as a worst-case low for the near term.  If hit, this Hidden Pivot will likely be tradable with a stop-loss as tight as you can abide. As always, you can bottom-fish more aggressively if you've racked up gains on the way down.  More immediately, three of the Hidden Pivot levels shown -- x, p and p2 -- can be used to initiate 'mechanical' trades, either from the long or short side. For real-time guidance in this task, tune to the Rick's Picks chat room. _______ UPDATE (January 7, 12:12 p.m. EST): Sellers have been crushing minor Hidden Pivot supports, implying that we'll need to use bigger patterns to identify important swing lows precisely. In this case, we'll use A=2110.00 (7/20/15) from the daily chart. It projects minimum downside at the moment to p2=1888.44 (!)  The D target associated with this pattern lies at 1817.00, about 7% below current levels. That would represent a drop of about 13% from last summer's record highs.

With shorts caught in a mild squeeze at the bell, bulls will hold a small edge Tuesday night. If they can keep this vehicle buoyant until Wednesday's opening, that will increase their edge when the regular session begins. Day traders can choose their opportunities as they arise, since they are likely to come from subtle changes in the chart that cannot be predicted at the moment. The chart shows a possible opportunity of another sort  -- i.e., one that would take shape if the futures should surprise by diving anew. The precise bounce from p2 suggests that a breach of this support would portend more downside to exactly 1952.25.  This means you could bottom-fish with a 1952.50 bid and a stop-loss as tight as 1.00 point. 'Mechanically' shorting a retracement back up to p2 may also be possible, provided the rally it meets our simple criteria.  Tune to the chat room for real-time guidance if you're interested in the trade. _______ UPDATE (10:22 a.m. EST): The big, bearish  pattern was drawn slightly wrong, with an erroneous point 'C'. Shifting it to 2075.00 (12/29, 9:00 p.m.) yields D=1955.75, my target for now. Yesterday high turned out to have been a fabulous mechanical short at p=2015.38. Now, the mechanical short is from p2=1985.56, stop 1995.50.

The bounce from Monday's lows has been unimpressive so far, but we should wait to see whether the pace of short-covering picks up during the night session before we write it off as a flash-in-the-pan. The a-b rally leg shown is clearly and decisively impulsive on the hourly chart, but it doesn't look powerful enough to gestate a c-d follow-through capable of reaching its target without stopping out an ostensibly tradable point 'c' low or two first.

Index futures have opened Sunday night with a timid thrust higher.  Please note that this vehicle would need to hit 2057.75 to demand our attention, since that would generate a robustly bullish impulse leg on the hourly chart. Although I strongly doubt this will happen on the first trading day of 2016, we shouldn't be surprised if, after a day or two, shorts have backed themselves into the same corner where they freaked out last week to trigger a two-day spasm of short-covering. Whatever happens, DaBoyz seem unconcerned at the moment that the new year will disrupt the business-as-usual blitheness that has prevailed on Wall Street since 2009. _______ UPDATE (11:42 p.m. EST): The flurry of buying faded quickly, giving way to a dive that projected to 2019.00, a Hidden Pivot one point beneath the so-far low.  The rebound should last for at least an hour or two, but if the pivot gives way sooner it would portend more slippage down to December's lows near 1990.00.

I've had no great success this week predicting the stock market's crotchety mood swings. Rather than risk ending the year with a dubious hat trick of lousy guesses, let me suggest instead that you flip a coin, or cast the I Ching, in the final trading session of 2015 in order to sharpen your entry points.  If you fill, please let me know in the chat room, since I will be standing by with a Ouija board to provide further guidance.

I published a link to the chart shown in the chat room Tuesday, then posted it again a few hours later for good measure.  As of Tuesday night it was still valid for any trading decisions you might undertake, although chat-roomers appear to have used the pattern, perhaps prematurely, to get short near p2=2072.19 toward the end of the session. Waiting to get short near D=2084.50 would have been less risky in my estimation, but one could still try getting long using a 'mechanical' bid at 2072.25, stop 2068.00, on a pullback after p2 has been exceeded by at least four points.  If the futures surprise by inching above D, the next logical top -- a high-odds spot to get short, I'd say -- would come at 2087.75.  This target is calculated by simply sliding down to 2007.25 for a point A low.

Predictably, the futures made their low before the opening, then took mincing steps higher for the rest of the day on short-covering. It was a weaker squeeze than I had anticipated, and it raises the odds that the S&Ps will finish the year mucking around in the thick of a supply zone that has been building for most of the year.  I still expect 2016 to begin with a thud and am therefore looking to stake out a short position in the final trading day of the year. Stay tuned -- especially to the chat room, since the betting on this vehicle has been hot and heavy.

Bears should take little comfort in Thursday's price action, comatose though it may have seemed. The holiday-shortened session featured a weak bull-trap rally with about two hours to go, followed by a moderate selloff into the close that could not have inflicted much pain on otherwise giddy buyers. Notice that the end-of-day low failed to breach even a single 'external' low on the hourly chart.  That would have required a print at 2047.50, whereas the actual low occurred two points higher, at 2049.50. That means bulls will begin the final week of the year with a slight edge, even without the boost stocks typically get between Christmas and New Year's Eve. Accordingly, I'll suggest using the 2080.50 target shown as a minimum upside projection for the near term. Traders can use a 'mechanical' bid at 2058.25, stop 2051.00, to get long, but this is recommended only to those who understand the simple rules that govern the tactic. If you're unfamiliar with 'mechanical' trades, stay tuned to the chat room for tips in real time. I've sketched out a hypothetical example that explains it graphically.

The futures have shown slavish obedience to our price targets, moving precisely and more or less predictably in the last few days from one Hidden Pivot resistance to the next. Yesterday, we used the 2058.13 pivot shown (p2 in the  inset) to forecast the intraday high within less than two ticks. It is just as predictable that if the futures exceed p2 by at least 3-4 points today, they will be on their way to 2080.50, where I expect a tradable top of at least short-term significance to occur. As a practical matter, it could still be risky shorting there, since the trading session ahead of the three-day Christmas holiday will end at 1:00 p.m. Eastern. Best bet: a 'mechanical' buy on a pullback to p=2058.13, stop 2051.00, after p has been exceeded by 3-4 points for at least three price bars. I've sketched this hypothetically for your further guidance.