E-Mini S&P

Today's chart is a composite weekly that shows the entire bull market, going back to 2009. You don't need a degree in technical analysis to see that it has gone on for long enough to be considered mature. On the other hand, the average bull market lasts 97 months; this one is only in its 74th month. From a purely visual standpoint, however, it lacks a dramatic ending. Look at the price action since December. Stumbling and bumbling its way higher, the S&Ps' tortured ascent clearly suggests a topping process, but not an actual top.  More visually satisfying would be a collapse following a bold leap to record heights. At that point, the last bear will have been gutted and disemboweled, and everyone else would be crazy bullish. I can think of a dozen good reasons why the bull market should end here and now. Lately, it has looked like hell, and even Apple, a key bellwether, can't seem to make much headway. What I expect, however, is not an anticlimactic end to the bull market such as would occur from these levels, but rather a scary plunge that would turn almost everyone bearish. And then, finally, the coup de grace: a final, spectacular rally to new highs that would trap bulls and bears alike -- trap them so badly that even financial geniuses who were half-ready for it would find no exit. Waiting for this scenario to play out will probably require more patience than I've got. Also, more courage and conviction, since a scary decline from these levels is going to seem like the real deal. Europe will be sliding into full-blown Depression, China's investment bubble will be imploding, and American consumers will be completely tapped out. Could one last rally evolve from such psychological depths?  We shall

The dive into yesterday's close was steep, but the futures were a 'buy' at the close nonetheless if you take your mechanical trading seriously.  From a technical standpoint this is so for two reasons: 1) an aging, 2104.50 rally target that was narrowly missed yesterday remains theoretically viable; and 2) the futures have pulled back to our 'sweet spot' -- a midpoint pivot that could be bought with the same 2078.00 stop-loss we used to get aboard on Friday.  Since that trade went on to produce a theoretical gain of $800 per contract, I'll recommend using $300 of your new lucre to do it again. If you did NOT do the original trade, you can still try entering near 2084.50, but using a 'camouflage' strategy that would effectively cut entry risk to five ticks ($62.50) or less. Night owls can use the 3-minute chart to identify an uptrending ABC pattern that might serve that purpose.

The trade-entry tactic that I sketched here last week has worked perfectly, producing a stress-free theoretical gain so far of about $550 per contract if you followed my simple advice. Traders were to have executed a mechanical 'buy' on a pullback to a 2084.50 midpoint pivot, using an implied stop-loss at 2078.00 that was equal to a third of the potential gain. As it happened, the 6.50-point stop-loss was unnecessary, since the pullback came down to exactly 2084.50 and went no lower. If you bought there in the way that I'd detailed graphically, you should take a partial profit on half the position near these levels, holding the rest for a shot at the 2104.50 rally target we've been using since last Wednesday. This gambit was intended for traders of all levels of experience. It was particularly do-able because the pullback to 2084.50 occurred, not in the wee hours, but smack dab in the middle of the regular session. Check the chart that accompanied the previous ES tout (archived) to see whether you could have followed my instructions. _______ UPDATE: This flying pig made it only as high as 2101.25 before relapsing 15 points. The mildly failed rally demonstrates once again that there is something seriously wrong with the ostensible health of the bull market.  If you were long all the way up (i.e., from 2084.50), a 'dynamic trailing stop' would have taken you out at 2100.00 for a theoretical gain of $800 per contract.

Yesterday's headless-chicken hysterics left a rather clear rally pattern projecting to 2104.50. If the futures exceed p=2084.50 by 3.00 points or more, a pullback to p could be bought 'mechanically ' with a 2077.75 stop-loss. Far less risky would be a camouflage entry keyed to the 'external' peak at 2089.25 recorded on 3/25. Night owls could get ahead of this trade by using the 3-minute chart to enter closer to x=2074.50 of the big pattern shown. ______ UPDATE (6:35 p.m.): No change, although night owls may have noticed that the futures closed above p=2084.50.  There's still 20 points of upside left to the original 2104.50 target, a fact that should provide a strong incentive to get aboard in after-hours trading. Two ways to do so are discussed above.

There is no energy whatsoever driving the rallies, only sporadic short covering when volume is especially thin. That said, yesterday's feeble waft exceeded the 'internal' peak at 2081.75 that I'd mentioned earlier, making the weakness that has ensued corrective. Since the rally surpassed the peak by only 1.00 point, it will likely be misread by many traders as a double top. Not by us, however -- it is legitimately impulsive -- and that's why I'll recommend using a buy signal like the one shown to get long. With implied entry risk of about 11 points, however, I'd suggest using charts of 5-minute degree or less, 'camouflage' style, to generate the signal when it is tripped on the daily chart. Keep in mind that the potential here is to as high as 2174.25.  If you're skittish about using camouflage, you may have another opportunity to enter 'mechanically' after p=2102.50 has been decisively exceeded and revisited on a pullback.

Bulls acted almost as gutless yesterday as we've come to expect from short-covering bears, pushing the futures 40 points higher while somehow failing to get past  a middling internal peak at 2081.75 recorded on March 30 (see inset). Buyers may succeed at it today, and then go on to achieve new record highs, but the fact that they were not able to hurdle the peak on the first try suggests that any rally in the offing is not destined for greatness.   As before, they'll need to push this gas-bag decisively past the midpoint pivot (2102.50) to imply there's sufficient wattage to get to its 'D' sibling, 2174.25.  Anything above the lower number will invite not only our diligent scrutiny, but our skepticism as well.

A trader's head could spin trying to make sense of Friday's fleeting plunge. Dismal payroll data was released on a holiday when most markets were closed, but that evidently didn't stop a privileged few institutional scumballs from unloading index futures two days ahead of the crowd. Electronic trading went on for about 45 minutes after news was released that America's on-again, off-again economic recovery had generated a paltry 126,000 jobs in March -- the fewest since 2013. S&P futures plunged 1% in the 45 minutes that traders were allotted to get a jump start on the herd. Ordinarily, the dirtballs' goal would be to exhaust supply on bad news by dropping their bids to levels that would be bargains even if the world were about to end. This time, however, it seemed there was unfinished business at the bell -- i.e., more selling to do in order to fully discount the awfulness of the payroll news. Whatever the case, I'd suggest using the stair-step targets shown in the chart to gauge the urgency of selling Sunday night. As always, even a small overshoot of a 'D' target would imply more downside to the next. Keep in mind that bad news is no longer necessarily good news, since most observers still (wrongly) expect the Fed to tighten no matter how bad the economy gets. Fed-watchers -- mindless sheep to a man -- will have their hands full trying to figure out which way Fed blather is about to zig or zag in order to manage our expectations. Rather than go dizzy trying to figure it all out, simply use the targets I've provided. It will also be helpful if you tune out the headlines and the benighted analysis of economists and other bozos who shill for the Fed. They know nothing,

Even with a flying leap into the bowels of hell Tuesday night, the futures still somehow failed to reach the 2020.25 target shown yesterday. Instead, bears squandered the opportunity and spent the day coffee-housing with their erstwhile nemeses, the bulls. The result was a day of tedium that left a still-negative bottom line.  The target remains valid; moreover, we should expect it to be hit, and to provide a tradable bounce, as precisely as the midpoint pivot at 2040.50 did Tuesday mid-morning. Night owls looking to board the southbound train should use the downtrending abc pattern begun from 2059.00 yesterday at 9:30 a.m. It is easily visible on the 15-minute chart and -- beware! -- has already stopped out shorts once, at 4:15 p.m.  If you prefer the easy-but-riskier mechanical short following a breakdown beneath p= 2040.50, the stop-loss would need to be at 2047.25.

Index futures were getting hammered unusually hard late Tuesday night, although there were no headlines at the major news outlets to account for it. Those doing the manipulating stopped just shy of breaching any key lows on the 180-minute chart (see inset). Instead, DaBoyz used those lows to generate a bounce that seems doomed to fail once shares have been unloaded into what appears to be a fake rally. Minimum downside thereafter would be to the 2025.75 Hidden Pivot support shown, although 2008.00 is possible if the pivot gives way easily. If 2008.00 fails as well, something more significant than the news headline of the hour is troubling traders. Q1 earnings reports, perhaps? ______ UPDATE (9:41 a.m. EDT): The futures swooned more than 50 points overnight, reaching 2060.75 on the rally I'd assumed to be a fake. I still think it's a fake, notwithstanding the freakish strength of the bounce. A gratuitous swing of this magnitude in the absence of headline news is most unusual, since DaBoyz tend to move the markets overnight only when news with obvious bullish or bearish implications crosses the tape. I'd be interested in hearing from subscribers on this.