E-Mini S&P

The 2134.00 rally target flagged here yesterday, which I'd said would be achieved "very precisely," did in fact catch the exact high tick of the day. It would have allowed subscribers to get long on the way up, for a profit of as much $350 per contract; or to get short at the high just prior to a 12-point dive that would have produced a gain of as much as $590 per contract.  The short triggered at around 3 a.m., when most U.S. traders were sleeping. However, one subscriber reported in the chat room that he'd set up an automatic short at 2134.00 before turning in, and that when he  awoke the next morning to find the position nicely profitable, he covered the short at 2126.00 for an $800 position gain. Looking immediately ahead, the balky selloff following yesterday's top produced some minor, bearish impulse legs, one of which could conceivably produce an actionable set-up for night owls.  Specifically, using a stop-loss no wider than three ticks, you could try bottom-fishing at either 2122.00 (p2), or at 2120.75. 

Considering there are four separate patterns of different degree driving the futures higher on the weekly chart alone, it's remarkable that the best bulls can do is worm their way to a merely marginal new record high as the new  week begins. DaBoyz are simply marking time, seemingly confident that on days when there is zero buying power, even from short-covering bears, they can still hold stocks aloft.  And on days when some meaningless piece of  economic news hits the tape, goading shorts into a nitwit frenzy, that's when big rallies come cheap and easy.  What can we expect in the days ahead?  Most immediately, look for more upside to the 2134.00 target shown. I expect the hit to be very precise, given the exact confirmation of the 2106.75 midpoint pivot last Wednesday.

Although trading at record highs, the stock market continues to look like hell. On Friday, buyers pushed this vehicle marginally above the previous day's peak before stalling precisely at the 75% pivot, 2121.75. The futures opened on mild weakness Sunday night, hinting that DaBoyz are accumulating contracts in order to unload them at higher prices. They don't know about the 2135.75 'D' target or its stopping power, but that's the number we should use as a minimum upside objective for today. You can short D with a stop-loss as tight as three ticks, stepping up the size of your position only if you've been long on the way up and are reversing the position; or, if you use 'camouflage' to initiate the short.  Wherever the minor uptrend tops, we'll want to pay very close attention to the corrective abc that follows, since, if it overshoots its 'D' target, that would be evidence that a correction of major degree has begun. If the futures instead correct quickly and unexpectedly rampage higher, we would use the  2138.75 target of a larger pattern (A=2038.00 on 4/3); and thence 2174.25 (A=1966.00 on 2/2). These Hidden Pivot resistances are sufficiently clear that we should expect a tradable pullback from each.  If it doesn't come, assume there's real buying power pushing the rally.

Short-covering -- the only source of buying power these days -- was noticeably lacking yesterday, preventing the futures from making even a marginal new high above Tuesday's. The day ended with bears somewhat dominant and this vehicle presumably headed to the 2072.75 target shown (see inset). Absent any disturbing headlines, however, it's liable to be a struggle to push this vehicle lower. Indeed, traders might as well try bottom-fishing with tight stops at 'p' and/or 'D' as shorting near the green line.  If p=2089.75 is decisively breached, a rally back up to the pivot would set up a 'mechanical' short there with a stop-loss at 2096.00.

Yesterday's rally left me wishing for just a little more, the better to get short at a fat price. However, since we seldom get what we wish for in this game, perhaps we should resign ourselves to either a wicked squeeze that guts bears before topping; or more likely, given the glum earnings reports for Q1, a continuation of the tedious ups and downs that have characterized this bull since last December. Most immediately, however, we should bring a bullish bias to our trades, since yesterday's somber rally generated a positive impulse leg on the lesser  charts (although not on the hourly). Caution is warranted, since Freaky Friday conditions will obtain -- but also because anyone who tried to leverage the ostensibly bullish pattern shown became road kill.

Subscribers who executed the simple trade detailed here yesterday and went short at 2090.25 could have come away with one-day a profit of as much as $1450 per contract, since the futures fell to an intraday low at 2061.25.  The position was never more than 3.50 points in the red, well shy of the 8.25 points we were ready to risk.  The fact that the 2065.50 target, a Hidden Pivot, was exceeded is not a healthy sign. Even so, the futures were on a short-term buy signal Wednesday night with 10.50 points ($525) of upside potential. There are three levels where the rally could stall, but a decisive move through any of them would portend more upside to the next, at least.

The futures were hovering just above a midpoint resistance when last week ended, presumably on course for a follow-through rally to the 2125.50 target shown. My minimum expectation is 2111.75, the p2 here, and it may offer a shorting opportunity, since this vehicle has struggled recently to reach D targets of various degree. _______ UPDATE (7:57 a.m. EDT): Once again, the E-Mini S&Ps have demonstrated that they are easily tradable using a 'mechanical' entry, especially at odd hours, and even if they remain extremely difficult to trade profitably during the regular daytime session. At 4 a.m. Eastern, they pulled back precisely to p=2098.00 of the pattern shown -- and no lower -- before rallying 10.75 points so far, to 2108.75. A mechanical buy at p would have required a 2090.00 stop-loss and partial profit-taking (still pending) at p2=2111.75.  _______ UPDATE (May 4, 6:44 p.m.): No change. Yesterday's rally stalled at p2=2111.75 as expected, leaving the 2125.50 target -- still -- as our minimum upside objective for the near term._______ UPDATE (May 5, 8:32 p.m.): I expect the downtrend to continue to at least 2065.50, with a possible bounce from 2077.75.  Night owls can short a return to the 2090.25 pivot, stop 2098.50, but be advised that doing so 'mechanically' would subject you to theoretical risk of $412 per contract. Typically, we look to whittle down risk that large with a 'camouflage' entry.  In practical terms, that would mean shorting the first downtrending abc pattern on a chart of leastmost degree once p is reached on a retracement.

With no Fed-induced nuttiness to pressure bear into covering short positions, stocks fell hard yesterday in line with our expectations.  The bad news -- for bears, that is -- is that the selloff left intact the bullish pattern we'd been using to project a swing high at 2132.00. The point 'C' low of the pattern lies at 2064.50, 5.75 points beneath Thursday's intraday low. Things could go either way on Friday, as is often the case, and so I'll hazard no prediction about the outcome. The somewhat bigger picture is of a stock market that, trading near all-tine highs, has still managed to look like hell.

A lack of bullish buyers hasn't stopped this vehicle from forging relentlessly higher -- short-covering has done nearly all of the heavy lifting since 2009 -- but  DaBoyz seem to be having trouble making even minor headway lately.  Even that old standby, wild swings caused by the latest, meaningless drivel from the Fed, never quite forced the broad averages into positive territory yesterday. Still, the usual headless-chicken nuttiness triggered by the non-news may have saved the Dow from falling 250 points to a still-viable Hidden target. Look for it draw the futures lower today and Monday. Bears were too skittish to try to double the 160-point loss the Indoos were showing around mid session, but they may do better with Fed 'news' out of the way.