E-Mini S&P

A 2118.75 rally target disseminated Thursday morning would have allowed subscribers to get short two ticks off the intraday high. Based on an initial position of four contracts, I recommended covering half at 2115.25 and a third contract at 2111.25.  The remaining contract was to have been tied to an 'impulsive' stop-loss on the one-minute chart. This means it would have been exited at 2115.50 at around 2:54 p.m. EDT. The total theoretical gain on the trade was 17.25 points, or $862. The 2119.25 high fulfilled a rally target that had been three days in coming, so we should expect the futures to take a breather for perhaps a day or two.  If buyers forge higher to close out the week, however, they should be presumed headed to the 2137.25 Hidden Pivot shown. Assuming this vehicle behaves as usual, the best time of day to grab a  ride north would be around 4:00 a.m. Night owls and traders in the European time zone should plan accordingly.

As predicted, the easiest trade of the day came yet again in the dead of night. Specifically, the futures dove 18 points after topping exactly-to-the-tick at a 2096.50 Hidden Pivot resistance I'd flagged here yesterday in an annotated chart. I erred in predicting the opportunity would trigger at 4:00 a.m., when traders shift their venue from Europe to the U.S. But the bottom line is unchanged in that nearly every trade worth doing in this vehicle is occurring when only a relative handful of U.S. traders are awake to take advantage. This one could have been worth as much as $875 per contract to insomniacs in the U.S. Since only one Rick's Picks subscriber belatedly reported having done the trade, I have not established a tracking position. But traders in time zones east of New York should monitor my index-future touts closely, since they often provide opportunities far juicier than the ones we've been seeing during regular market hours. Concerning yesterday's nitwit histrionics, brought on by whatever Yellen is thought to have said, they left a 2107.75 rally target broached here earlier intact. Because it has been confirmed by the precise pullback from p2=2096.50, you could short it with a very tight stop-loss. Officially, however, I am recommending the trade only if you have been long on the way up. Based on a current price of 2088.25, that would imply profit potential of as much as $487 per contract -- quite a cushion for any stop-loss you use to get short. _______ UPDATE (11:24 a.m. EDT):  Buyers blew past 2107.75, putting the 2113.25 target of a larger pattern in play. The futures topped there moments ago, but if they push past it, the next stop would likely be 2118.75.  Since that could well be the end of the line for

The pattern shown should take the guesswork out of Wednesday's session, although you might have to be glued to your monitor at 4 a.m. to take advantage. That's when the action shifts from European markets to the U.S., and lately it has been the only time of day when relatively 'easy' trade set-ups have materialized. Short the 2107.75 target with a stop-loss as tight as 2109.00 if you've been long for at least a part of the ride up. ______ UPDATE (3:48 p.m. EDT): What a shocker! Today's by-now obligatory reversal occurred at 5 a.m. rather than at 4:00!  Subscribers should not have been surprised when the sharp reversal -- an 18-pointer worth as much as $900 per contract to those who got short -- came from 2096.50 exactly (p2 on the chart I'd drawn).

The futures have been fairly predictable lately, even if the best trade of the day based on yesterday's guidance would have entailed getting short at 4 a.m. EDT. Just as predictable was that a flurry of selling early in the session would dry up, and that the subsequent rally would claw back most of the losses but no more. All of this repetitious tedium left the 2054.50 correction target given here earlier intact, even if the futures have shown no great eagerness to get there. The target can still be bottom-fished with a stop-loss as tight as 1.00 point, although I wouldn't suggest trying to get short for the ride south by offering contracts a second time at the 2080.50 midpoint pivot. Better to do so 'mechanically' by using the 2070.00 midpoint of the small downtrend shown.  Alternatively, a push exceeding the peak marked with a red x would be bullish and represent a possible buying opportunity. _______ UPDATE (9:31 a.m. EDT): The shorting opportunity was negated when the futures fell to within 1.25 points of the pattern's 'D' target overnight.

It's early Sunday night, and DaBoyz have hammered this vehicle down the equivalent of 100 Dow points. This isn't bearish per se; rather, it is a tightly controlled test to see how far stocks will need to fall before sellers have been exhausted. My hunch is that the futures may have to drop a further eight points or so, to at least 2064.00, before the usual suspects can buy stocks without fear of more weakness before they can unload. Bears shouldn't get their hopes too high in any case, since there are two 'structural' supports that would get in the way of an unmitigated selloff: last week's low at 2061.25, and the key May low at 2050.00. If it gets that bad, I'll recommend bottom-fishing at 2054.75 nevertheless (presumably reversing a profitable short-position).  That's a clear and well-located Hidden Pivot that's worth a 1.00-point stop-loss.

As anticipated, the futures ratcheted into a supply zone created last week before the broad averages went into a four-day decline.  The purpose of this is to erode the confidence of any bear prescient enough to have gotten short near the recent, record highs. Bears shouldn't expect any respite today, and they could even get impaled if there is 'bullish' news on the tape.  My immediate target is 2118.50 (p2), or 2137.50 if any higher. If the futures come to rest near the second number shortly before Friday's close, check for further guidance in the chat room, since that could provide a good opportunity to get short.  Please note as well that the futures are already a mechanical buy at 2099.75, stop 2089.75, although the implied ten points of initial risk makes a 'camouflage' entry an enticing alternative. ______ UPDATE (2:12 p.m. EDT):  So much for follow-through.  Was Wednesday's short squeeze the theatrical gasp of a dying bull? We can't know for sure, at least not yet, but this morning's relapse is telling, since it occurred without the futures having achieved new record highs. That means there will be a few bears left to tell the tale, suggesting that the formerly rampaging bull is either too weak to finish the job, or that it has deliberately left some survivors to drive the next short squeeze. It seems likely in any event that stocks will need to go lower before they can be squeezed higher again.

Yesterday's impressive short-squeeze was instructive, since it made clear that trying to amass a short position as the futures work their way lower will not work. Any bear who laid out stock between last Wednesday and Monday was in the comfort zone when trading began on Tuesday. The mild uptrend that ended the day may have made a few of them nervous, but not sufficiently so to cause them to bolt for the exits. Wednesday's rally was another matter, however. It built slowly overnight, taunting bears to say "Uncle!" with a weak hammerlock that initially might have seemed escapable. Then, on the opening bell, with little warning, the futures took off like the proverbial bat out of hell. By mid-morning they were up the equivalent of  240 Dow points, snatching back gains that had taken four days to accumulate in just a few hours. Shorts were still on the ropes at the close, waiting for the coup de grace either Wednesday night or Thursday morning. We should expect a mop-up operation in the days ahead that consists of feints higher to take out shorts from late May and early June that were initiated presciently before the recent downtrend began in earnest. The foregoing should serve to remind us that even for the most diligent permabear, there will be no "shorting the top."  Perhaps it will come on unsettling news in the dead of night, or on a ferocious Friday afternoon spike that causes even the boldest bears to cower in fear. Or maybe stocks will go into a freefall in the middle of a quiet day, plummeting 500 points on thin volume. What a short squeeze that would set up! It would impale any trader lucky enough to have been short in the first place.  If we are the lucky

Yet another day of constipated price action, this one characterized by meaningless spasms with an intraday range of about 16 points. It has been entirely predictable, even as the futures have worked their way lower, that the average session would consist of selling that petered out quickly, offset by a weak rally that went nowhere. Come Wednesday, I'll stick with the 2054.25 target proffered here yesterday. A lesser trend evident at day's end was bullishly impulsive and headed in the opposite direction, but I'm more enticed by the prospect of shorting p=2075.75 than in trading the upside. A three-tick stop-loss would be appropriate.

How do you short a market that can't seem to mount a sustained rally? One answer is to get long a tick or two ahead of the feeble rallies that are occurring, and to use any profits thereof to cushion shorts from minor corrective peaks. The viability of this strategy is corroborated by the chart shown. Notice that the only bounce on Friday worthy of the name came from within two ticks of a 2075.25 Hidden Pivot target. This suggests that this vehicle is moving obediently and precisely to our numbers, at least for the time being. If this observation is to hold, the next tradable bounce will come from within a tick or two of 2063.50, a Hidden Pivot that is the 'D' target of the abc pattern I've labeled in red. Incidentally, I've heard from one subscriber who said he did not want to wait for the perfect moment to get short. He laid out E-Mini S&P contracts at  2089.75 and 2086.25 yesterday with the goal of 'swinging for the fences'. Of course, if the stock market is about to go to hell, it will not much matter whether one got short at a 'good' price. That said, our game plan will be to continue to look for trades in places where risk can be held to a practical minimum. _______ UPDATE (9:47 a.m. EDT): The futures crushed the support before the opening, falling to a low of 2061.00. This hinted that the bounce that followed was destined to go nowhere. A mechanical short from p=2076.00, stop 2083.00, would be targeted on 2054.25. On the hourly chart. Here's the pattern:  A=2113.25 on 6/3, at 11 a.m.; B=2075.75 on 6/5, at 10:00 a.m.