E-Mini S&P

Yesterday's selloff was refreshing, even if bears were unable to hit the four-bagger that we all know is coming.  Maybe later in August -- or at least, sometime before the October Crash that too many prognosticators seem to be expecting.  Thursday's moderate selloff exceeded virtually all of the appealing targets one could have extrapolated from the intraday charts. The one shown is less than stellar because the tail end of the A-B impulse leg failed to exceed any external lows. It'll do in a pinch, however, so we'll plan on more downside to at least 2052.00, the D target. If it's easily exceeded there will still be support near early July's low around 2038.00. You should bottom-fish the Hidden Pivot levels shown in the chart only if you are  reversing a profitable short position. Payroll numbers are due out, and DaBoyz will not likely pass up a chance to goose shares whatever the news. My gut feeling is that if the initial move is indeed up, it will be a shorting opportunity. There is no bullish buying interest whatsoever right now, and it has gotten harder and harder for the smart guys to stampede the only buyers left in the game -- i.e., short-covering bears. Also, there is no way the payroll numbers -- a hoax that has grown all-too-tiresome -- can be ostensibly meaningful enough to trigger more than a short flurry of buying.

I'm quite confident in the pattern shown -- it looks and quacks exactly like a duck -- even if the futures seem less so. Perhaps they could use some obedience training?  Yesterday they pushed past the midpoint resistance, presumably bound for the p2 pivot at 2116.00. Instead, the little bugger turned tail and retreated all the way down to the green line before buyers stepped in. This is simply crazy, especially since the intraday high occurred not in the middle of the night, as has been customary, but in broad daylight, an hour after the opening bell. This would seem logical if there had been news after the opening conducive to a short squeeze. But that was not the case, since the headlines were dull and uninspiring. Coming in today, we'll stick with the bullish targets shown. They will remain theoretically valid until such time as the 'C' low at 2080.00 is breached to the downside. Night owls can try bottom-fishing at 2087.75, the p2 pivot of the minor downtrend from Wednesday's top. ______ UPDATE (10:41 a.m.): The little drecker has let gravity do all the work this morning.  The slight overshoot of a minor 2084.50 downside target implies that a pattern of larger degree is at work, with a target at 2079.25 (15-minute, A=2107.75 on 7/31.  Note: The uppercase 'A' implies that, by my reckoning, the dominant trend is now bearish; and that any rally from 2079.75 should be shorted.)

More than six years into the bull market, it's clear that bears must still fight for every inch, even on days like yesterday, when there was no bullish news to hold stocks buoyant. Six hours of headless-chicken price action brought the futures only marginally closer to the downside target at 2052.00 noted in my last tout. Today's analysis comes with a fresh chart showing a lesser pattern that will likely be more useful for short-term traders.  The bounce from p=2082.25 has validated the pattern while also opening the door to shorting 'p' mechanically' if price action near that number meets our simple rules. I offer this trade with the caveat that bears might have to endure more than their fair share of pain just to gain a few measly points. Focus on the big picture, however, which suggests the bull market begun in 2009 may already have topped, and it may be easier  to deal with the inevitable whipsaws. _______ UPDATE (August 5, 11:03 a.m. EDT): The future never dipped below the 2082.50 pivot, so the short trade never triggered. Instead, they got goosed sharply via a short squeeze that projected as high as 2127.75 most immediately.  The pattern's midpoint pivot at 2104.00 has been penetrated within the last hour, shortening the odds of a continuation at least to p2=2116.00. Accordingly, you should position mechanical trades from the long side.

The futures thrashed around for several hours before diving precisely to a target I'd aired in the chat room around mid-dive. The target was closely coincident with the 2080.50 midpoint support shown, but once the latter number is breached, look for more downside to 2066.25, and thence 2052.00. Both of these Hidden Pivots were mentioned as well, and I expect them to be reached, since this vehicle has looked like hell lately. I've sketched three hypothetical 'mechanical' trades than can be culled from the pattern, and night owls in particular should check them out. A fourth, shorting a rally up to p2=2066.25 after it has been breached, may also be possible.

The rally pattern shown has dominated and precisely controlled price action for the last week, most recently with a stall exactly at the midpoint Hidden Pivot, 2109.25.  Once decisively past it the futures would become an odds-on bet to reach the D target at 2130.50 -- equivalent to a 250-point Dow rally from current levels. Traders can get long via a 'mechanical' bid if buyers decisively exceed, then return to, either of two key levels -- p or p2. The stop loss associated with each would be placed exactly 3.75 points beneath the entry price.  If you are unclear on my relatively simple rules for mechanical trades, do not attempt this one. (Note:  The green line at 2098.50 can also be used in the same way Sunday night, although I judge the entry risk to be somewhat higher than from p or p2.)

The futures have stalled for two days almost precisely at the midpoint Hidden Pivot of the pattern shown. It's still speculative to suggest they are about to pop through the resistance, but the fact that Thursday's close was just above it lends weight to the bullish case for the near term. If this vehicle has traded 2107.00 or higher in the opening hour, we should infer that it's on its way to at least p2=2125.50. Traders could buy a pullback to 2102.50, stop 2194.75, provided the set-up meets our criteria for a 'mechanical' entry. If the close is 2127.00 or higher, look for a finishing strike to D=2148.50 on Monday.

The rally blew past a 2085.00 target I flagged here yesterday, implying that a pattern of larger degree is driving the move. It is shown in the chart (see inset), and although I doubt this short-squeeze will reach the 2130.75 terminus, buyers shouldn't have much difficulty achieving p=2093.75, or perhaps even p2=2112.25. Either one of these Hidden Pivots can serve as a launching pad for a 'mechanically' initiated long position. Also, the lower number can be shorted, stop 2094.25, provided you've caught the ride to it. ______ UPDATE (8:22 p.m. EDT): A 'mechanical' buy at 2093.75 is in good shape Wednesday night, since the futures have rallied 10.50 points so far, to  2104.25, after pulling back just 2.50 points beneath the suggested entry prices. For now, tie what remains of any position to a trailing stop or an impulsive one that would allow you to exit with a profit no matter what. My immediate price objective is 2112.25, but save a small piece of the original position for a swing for the fences: 2130.75.

The futures did yesterday what they've been doing for months - i.e., topping in the dead of night on near-zero volume, then spending the rest of the day screwing the pooch.  In the course of this tedium, they avoided a rendezvous with the 2046.75 target shown, presumably because it lay too far outside of the range established in the opening hour. The target remains valid nonetheless, and if it's reached at the usual time -- i.e., between 2 a.m. and 5 a.m. EDT, I'd suggest bottom-fishing with a stop-loss as tight as 1.00 point. Alternatively, a thrust exceeding 2069.50 would be warning of a presumably minor reversal. _______ UPDATE ( 12:34 a.m. EDT): DaBoyz have wafted this carny game as high as 2072.25 tonight, creating a bullish impulse leg on the hourly chart. Although a 'b-c' correction leg has yet to form, traders can use a=2063.00 (10:00 p.m.) as a starting point to generate an entry signal along an abcd pattern. The trade will become riskier if the point B high winds up being higher than 2072.25, since the rally so far, such as it is, has probably already turned too many other traders bullish.  _______ UPDATE (7:14 a.m.): On the 30-minute chart, after one unsuccessful attempt, the trade tripped at  3:45 a.m., based on b=2077.00 (1:30 a.m.); c=2071:00  (3:30 a.m.) and x=2074.50. Half the position should have been exited at p=2078.00 (6:15 a.m.), with the remainder held for a shot at D=2085.00, o-c-o with a break-even stop at 2070.75. _______ UPDATE (10:21): The position was scratched after the futures failed to go any higher than 2078.25.

Bulls will have the benefit of the doubt as the new week begins, since Friday's low fell just two ticks from a Hidden Pivot correction target at 2069.25 that had taken a week to reach (see inset).  To find a set of tradable coordinates for Sunday night, I'd suggest zooming down to the 5-minute chart and focusing on this bullish pattern: a=2072.50 (Friday, 2:00 p.m. EDT); b=2079.25 (2:55 p.m., still tentative); c=? _______ UPDATE (July 27, 9:32 a.m.): The futures have relapsed beneath Friday's low, generating an impulsively bearish pattern on the hourly chart that projects to 2055.50, or 2046.75 if any lower. (A=2103.75 on 7/24). p=2063.75 can be used to set up a mechanical short.