E-Mini S&P

At press time, the futures were in a relatively steep dive that has taken out Thursday's lows while exceeding the 1124.50 Hidden Pivot target that was my worst-case projection for the day. My guess is that the move is news-driven -- but that it needn't have been, since the futures looked primed to fall anyway. I doubt whether I'll know for sure what the news is before this tout goes out to you, since, if you can see it getting discounted in real time, the perps who are doing the discounting are undoubtedly wired to sources far subtler and less obtainable than, say, finance.yahoo.com. My guess, however, is that it is simply a feedback loop caused by selling in Asian markets that was catalyzed by the earlier selling in U.S. markets. Stocks are too volatile for me to suggest a specific trade at the moment, but night owls should use the pattern shown to gauge the strength of the downtrend. The immediate target is 2008.25, nine points below current levels, but if it's easily exceeded, look out below.  Paradoxically, you can be bolder trading Hidden Pivot levels when stocks are moving sharply. As you may have observed on Thursday, HP targets work with even greater accuracy than we've grown accustomed to when stocks are quietly range-trading. _______ UPDATE (7:49 a.m. EDT): My target caught the overnight low within two ticks. The ensuing 20-point bounce could have been worth as much as $1000 per contract  to anyone who got aboard. The rally failed to generate a bullish impulse leg on the hourly chart, but we should monitor this 'illegitimate' pattern nonetheless to gauge the strength of the bounce, which was continuing at this time: a=2012.00 (2 a.m.); b= 2028.75 (5:30); and c= 2017.75.  A buy signal has already been tripped at

Lest bears break out the bubbly prematurely, I've reproduced a chart that shows why the 2134.50 rally target broached here earlier is still in play, at least theoretically. The best reason I can think of for the target NOT to be reached is that we are so very eager to get short there.  Of course, the goal of getting short will be far more difficult to achieve with the futures thrashing around like a snakes' body after its head has been severed. No one said it would be easy, though, and we shouldn't be too surprised if the actual opportunity to nail The Top turns out in retrospect to have been beyond reach.  The desperation evident in yesterday's failed short-squeeze tells us that stocks really are in trouble here. However, we won't try to be heroes, shorting this vehicle with a 20-point stop-loss. Better that we wait for a clean shot than get whipsawed for the next few days.

Mr. Market has been making it extremely painful for bears to stay short. The reason for this is that nearly everyone we know is bearish right now; and, for the first time in more than six years, it would appear that they are finally going to be right. The market is in a major topping process as far as we can tell, but there's no way all of us permabears are going to make a big score when stocks collapse. Mr. Market simply doesn't work that way, although the precise manner in which he will screw bears out of the payoff they've awaited for years is maddeningly unpredictable. My own favorite scenario begins with a devastating short-squeeze rally on a Friday, followed by some geopolitical or financial disaster over the weekend that causes stocks in Asia and Europe to collapse Sunday night. By the time U.S. traders awaken on Monday morning, most of the damage will already have been done. U.S. stocks will open on a breathtaking, unshortable gap lower, leaving the algos and high-frequency traders to beat each other to death. (Even the darkest cloud has a silver lining.) More immediately, and based on a 2096.50 rally target that served us well yesterday for purposes of picking a short-term top, the futures' subsequent push past it implies they are bound for the 2134.50 target shown. It is tradable from  either side of the market, bull or bear, but you should be prepared for a stall -- also possibly tradable -- at p2=2112.50. That pivot can serve as out minimum upside target for the very near term, but it may be of value only to night owls. ______ UPDATE (10:20 p.m.): Nothing to add after Tuesday's tedious scuddle. The target shown remains valid.

The futures were flat shortly after 9:00 Sunday night, but my hunch is that the lull is setting up a resumption of last week's short-squeeze rally. This would be confirmed by a decisive breach of the 2096.50 midpoint pivot shown. If the red line is exceeded by perhaps 4.00 points, a pullback to it could conceivably set up a 'mechanical' buying opportunity for night owls. It would also hint of further upside to as high as 2119.75, the 'D' target of the pattern. That would equate to a Dow rally of more than 200 points and put the E-Minis within easy distance of new all-time highs. I'd be eager to get short up there, especially if the rally hits a Hidden Pivot target that has been six weeks in coming. The precise target is given in the chat room in a post published by me at  21:12. It can be found on the hourly chart, where A=2038.25 on July 9, and B=2126.25 on July 20. _______ UPDATE (8:47 a.m.): The futures have sold off moderately overnight, so far with little technical consequence. The weakness would generate a bearish impulse leg on the chart shown if it were to exceed 2076.00 to the downside. The 2119.75 rally target will remain theoretically valid in any case, however, as long as the pullback doesn't exceed the point C low at 2073.25.

There was no follow-through to Wednesday's short-covering rally, but I wouldn't count bulls out yet. Even so, night owls shouldn't pass up an opportunity to get short in the wee hours if the futures happen to be hitting a Hidden Pivot rally target at that time.  That's when nearly all intraday highs are occurring these days, sometime between 2:00 a.m. and 5:00 a.m. Eastern.  In the present context, the short would come at p=2084.00, or p2=2087.25 if any higher. A stop-loss as tight as three ticks could be used -- or the 'camouflage technique' if you know what you're doing. These numbers would be negated by a dip below 2077.25, the point 'C' pf the pattern. Were this to occur, the larger, bearish ABC projects to 2070.75, a Hidden Pivot that could be bottom-fished with as tight a stop as you can abide.

The usual talking heads were attributing Wednesday's V-shaped recovery to firming oil prices, but it would have been just as accurate to say the Easter bunny or Vladimir Putin was behind it. Whatever the cause, short-covering bears scrambled for cover about an hour into the session, when initially fierce selling appeared to dry up. The intraday low in this vehicle was 1246.50 -- equivalent to a nearly 300-point plunge in the Dow and just six points from the 1240.75 target we'd been using as a minimum downside objective. The fact that the target was not quite reached should make us cautious about getting in the way of any follow-up rally in the days ahead, since it could conceivably achieve marginal new record highs.  It would take but one more surge equal to yesterday's to get it there. Meanwhile, traders can use the 2092.00 target shown as a minimum upside objective for the very near-term. Night owls can try a 'mechanical' entry at either p or p2, but don't attempt it unless you know what you're doing.

The bull market is dying, with feeble short-covering rallies not half as strong as the ones we saw just a couple of months ago. They have been ending with a whimper, like a dog crawling to the side of the road after being hit by a car. This vehicle avoided the p2 support at 2057.75 (see inset) the first dip down to it last Friday, but my hunch is that the pivot will be breached shortly, giving way to a finishing stroke to the 2040.75 target flagged here earlier. You can try bottom-fishing there, but the payoff will be better if you've been short on the way down. That will be most easily accomplished via a 'mechanical' offer at 2057.75, stop 2063.25, after the pivot has been exceeded by perhaps 3.00 points (or so).

Monday's rally was strong enough to spook a few bears, and it even generated a fresh impulse leg on the hourly chart. However, it left a larger, bearish pattern intact, and that's the one that still rules. It would be negated by a move above the 2109.25 point 'C', but until such time as that happens we'll continue to use the 2040.75 target for the near term.  There are mechanical trade that could be attempt, respectively, at p and p2, but price action has been so wacky lately that I'm not going to recommend any specific plays for night owls.

There are no crystal-clear patterns that would yield a commensurately clear target, so the one shown at 1041.50 will have to do, at least for now. I've favored it because of the many bounces that occurred precisely from the 1080.25 midpoint pivot that is associated with the target.  There are five possible 'mechanical' trades that could conceivably be derived from this picture over the next week or so: 1) a tightly-stopped long from p (although the many bounces from p that have already occurred will have diminished the usefulness of this pivot); 2) a short from p after it has been exceeded by a perhaps three or so points; 3) a tightly stopped long from p2; 4) a short from p2 after it has been decisively penetrated; and, 5) a long from D=1041.50. More downside to these Hidden Pivot targets should NOT be regarded as a foregone conclusion. My gut feeling is that gold will rally very sharply if the stock market begins to fall dramatically. That would imply the futures are basing here rather than being under distribution. The first hint of this would come on  a rally exceeding a visually distinctive external peak. At present that peaks lies at 1119.00 (July 20).