E-Mini S&P

Index futures have opened Sunday night with their usual headless-chicken flourish, gapping down the equivalent of 130 Dow points. This was a pretty tame compared to the hysterics we've seen the last four or five Sundays. But then, the news concerning Greece was pretty tame as well: Germany & Friends appear resigned to let Greece drop out of the eurozone for a while, presumably until the Greeks get their act together in some as-yet-unspecified way.  There was talk of Greece having to pony up $50 billion euros as a good-faith escrow to pay off its debts while Brussels acts as a de facto bankruptcy trustee. As bankruptcies go, this one seems about as soft as the bankers could conceivably devise, and no one was actually using the B-word. From a technical standpoint, and strictly speaking, the futures were a short when they fell back to 2058.75 after rallying off the heavily manipulated, opening-bar low (see inset). However, they looked so comfortably buoyant that we should probably focus on bullish opportunities instead. Specifically, I'll recommend bottom-fishing with a 2053.25 bid, stop 2051.75.  The trade is recommended for night owls only, since nuttiness could revive briefly when stocks open Monday morning, putting a delicate Hidden Pivot support under more stress than it might be able to abide. _______ UPDATE (11:54 p.m. EDT): The Whoopee Cushion bounce off tonight's heavily engineered low has negated the buying strategy detailed above. Even so, I doubt that the rally will make much headway above Friday's 2074.75 high. Consider shorting a single contract at 2078.75, a minor target that went unfulfilled last week. A 2080.25 stop-loss is appropriate, but you can trade this one more aggressively if you use camouflage.  If you're uncertain how to do this, ask in the chat room for guidance. _______ UPDATE (10:12

The usual mountebanks, hustlers, arse bandits and wild-eyed financiers have goosed the futures 20 points in after-hours trading on news that Greece had submitted a "reform proposal".  We all knew this was coming, but its timing has narrowed the window of opportunity for betting against a successful outcome, as well we should. We would have preferred that the rally had come a few days after today's fleeting melt-up, which was based on the equally stupid and desperate assumption that China's plunge protection team has things under control. Alas, the time to act is now, whether you were prepared to do so or not. Like nearly every short-covering rally we've seen during the last month, this one seems destined to peak around 4 a.m. EDT, when index futures are most easily manipulated on thin volume. If it has been your goal to get short in timely fashion, I have no particularly juicy targets to offer. The market's recent gyrations, wild as they've been, have produced a string of 'inside days' that do not lend themselves to bullseye predictions. Strictly speaking, however, the pattern shown (see inset) projects to 2078.75, a Hidden Pivot resistance that's as good as any I can offer for purposes of getting short. A rally touching that number would imply a bullish breakout above some recent peaks, and although I'm inclined to think it would be a trap, that wouldn't preclude using the 'camouflage technique' to find a low-risk entry spot. You could do so by zooming down to perhaps the one- or three-minute bar chart, shorting the first downtrending abc pattern that occurs after the breakout. If this happens when I or some other Pivoteer is in the chat room, please don't hesitate to ask for guidance. Good luck!

If there is such a thing as easy money in the trading world, it comes to those who go against a dramatic closing high or low.  Thus, if the broad averages end the day at or near the top of a strong rally, you can bet that index futures will sell off moderately in the hour or so after the bell. Conversely, if stocks get slaughtered as they did on Wednesday, their initial move after the bell, via E-Mini index futures, will be up. That is what is occurring in this vehicle at this moment, and it could have been worth as much as $260 per contract so far to anyone who went long at the bell. The reason this trade works so well is that the pros who control these markets -- the night shift, as it were -- are setting themselves up for a resumption of the dominant trend the next day. This strategy perfectly suits those on the other side of the trade, since bears will want to take profits on short positions on days when sellers have prevailed, and bulls will want to do likewise when shares have rallied strongly.  The force of the buying and selling will be muted in comparison to that which occurs during regular hours, but it will usually be strong enough to provide liquid, orderly markets, especially in the first hour or so after the close. Easy money aside, what does yesterday's selloff portend? My guess is that the 2003.75 downside target first broached here a couple of days ago will be achieved.  If so, it would mean the Dow has a further 300 points to fall before the bear cycle begun from 2122.00 on June 22 has run its course. If a pattern that has become entrenched during the last

The futures ended June with a robustly bearish impulse leg, but the nasty follow-through we might have expected in July has unaccountably been held in check. It seemed to be unfolding in earnest after the opening yesterday, with the futures eating away at a sturdy midpoint support at 2041.25 (see inset).  After breaching this Hidden Pivot by a decisive six points, however, they whipped around and finished higher on the day.  Now, although the target a 2003.75 and a lesser one at 2022.50 remain valid in the event of a selloff, my hunch is that bears have grown too frustrated and fearful to try a takedown. On balance, I'd still look for lower prices into week's end, but my hunch is that they will come only with a lot of herky-jerky action. _______ UPDATE (10:26 a.m. EDT): The futures have been down as much as 30 points this morning -- meaningless movement, since the high and low both lie within yesterday's even more gratuitously expansive range.

The fact that the futures made their engineered low on feeble volume Sunday night is about as surprising as the outcome of Greece's referendum. The selloff  was purely a reflex -- institutional traders bowing to the reality that the news, whatever it might portend, could not possibly be bullish. Even so, by recouping nearly the entire loss by day's end, traders may have convinced themselves, at least for the time being, that Greek's bankruptcy will be a non-event. Their devil-may-care attitude may come back to haunt them, however, since no one can predict how things will play out. For our part, rather than assuming that a felicitous state of tedium is about to return, we'll treat the stock market as though it's in a potentially very important topping process.  It's possible that breadth already has topped, by the way, within the very narrow time window that my colleague Peter Eliades had predicted. From a technical standpoint, the steep decline from the June 22 high of 2122.00 created a strong bearish impulse leg on the daily chart (see inset). Its 'D' target at 2023.75 will remain valid unless the current bounce exceeds the point 'C' high of the pattern, 2079.00. Yesterday's short squeeze came close, but we'll wait and see if it sputters out before we start treating the bearish target as a done deal. A fall of that magnitude would be equivalent to about 600 Dow points.  In the meantime, a short to at least 2041.25 (p), or perhaps p2=2022.50, looks more promising to me than any bull trade from these levels. If the futures rally to, or slightly above, 2079.00, look for an entry opportunity in the form of a minor, downtrending ABC pattern (i.e., a camouflage-style trade).  I like the odds because any feint to 2079.00 would be

Buyers seemed quite fatigued in holiday-shortened trading Friday, but even if they get second wind, the rally would likely be capped at 2081.50, a Hidden Pivot resistance that you could short with a stop-loss as tight as three ticks. If the futures sink, as seems more likely, look for the weakness to hit 2051.50, or perhaps 2042.50 if any lower. You can get short 'mechanically' if price action is similar to what I've drawn hypothetically. However, make sure you keep risk:reward in a 1:3 ratio, as our rules for this type of trade require.  Beware that news concerning the Greek referendum could cause index futures to turn especially volatile Sunday night when they resume trading. _______ UPDATE (7:05 p.m. EDT): DaBoyz have opened this vehicle with a volume-less shakedown equivalent to about 300 Dow points. Since the news from Greece could have surprised no one, we should assume as we did last week that the selloff is entirely reflexive -- knee-jerk behavior by institutional traders who must react in the same way they assume their colleagues and competitors will react. They are also attempting to exhaust sellers so that they can run the futures higher, unloading inventory when conditions are right later tonight or Monday morning. Keep in mind that even though the bounce from last Sunday night's heavily oversold lows went nowhere, the eventual bottom occurred just seven points beneath the one that had been recorded Sunday night.

Two days after Monday's avalanche, the obligatory bounce has yet to exceed a single 'external' peak on the hourly chart. That would require a print at 2083.50, but so far the futures have gone no higher than 2077.50, yesterday's peak. The holiday-shortened week is undoubtedly contributing to the stock market's lackluster performance, but it may also stem from a lack of buying interest that has been evident since February.  I doubt whether the mood will be any livelier as trading draws to a close ahead of the holiday, but there may be an opportunity for night owls to profit nonetheless.  We already know that stocks will make their high in the dead of night, somewhere between 4 a.m. and 6 a.m., so you should plan on getting short at either 2073.75 (p) or 2086.75 (p2) if one or the other is hit.  A stop-loss as tight as three ticks can be used, implying you'd need at least nine-ticks movement your way before taking a partial profit or implementing a trailing top. _______ UPDATE (10:34 a.m. EDT): The futures died between the two pivots given above, with two gratuitous thrusts six hours apart. The first peaked at 4:15 a.m. with a 2076.25 print; the second at 8:45 a.m. (45 minutes before the opening) at 2079.00. That should be it for the day, at least to the upside.

Although Monday's selloff generated an unimpressive bearish impulse leg on the daily chart, we are obliged to give an aging bull the benefit of the doubt until this feat has been surpassed with the creation of a strong impulse leg on the weekly chart. That hasn't happened since 2009, when the S&P futures were in the throes of a stunning 58% decline. Our Hidden Pivot rule is that, to create an impulse leg, the downtrend must exceed at least one 'internal' and one 'external' low without a visually significant upward correction. Applying that rule here, we would need to see an unpaused plunge beneath the 1958.50 low (#3 in the chart) to say with confidence that the bull is dead. More immediately, it would require only a breach of 2050.00 (#8) to suggest this speculatively.

The pattern shown has the kind of sinewy gracefulness that tends to produce accurate price targets. If so, the decisive breach of the 2053.75 midpoint pivot implies more downside to at least p2=2039.00, or perhaps to D=2024.50 if any lower.  Each of these Hidden Pivots is tradable in theory, meaning you could short p if a retracement rally to it meets our criteria for a 'mechanical' trade. Less labor-intensive would be bottom-fishing p2 or D with a tight stop-loss. How tight? I'd suggest five ticks, but you could step up position size if you are able to use 'camouflage' to get aboard.