Elsewhere on the page, I've compared Friday's dramatic plunge to Japan's sneak attack on Pearl Harbor. Thanksgiving Friday was supposed to be a quiet day on Wall Street, but it looked more like the possible start of the bear market we've long expected. The selloff generated a powerful impulse leg on the daily chart, although it did no damage whatsoever to the weekly. We'll keep that in mind lest permabear hubris dull our judgment in the weeks ahead. It would not be unusual for a major trend change to occur after the trend has fallen shy of an important Hidden Pivot target. The current trend failure occurred at 4740, a not insignificant 20 points below a 4760 target we'd culled from a pattern tracing back to 2009. There needn't be any guesswork, however; we'll know what's on Mr. Market's mind by paying close attention to corrective patterns on the hourly chart. If they start exceeding their D targets routinely, that would add to the evidence that a major bear has commenced. The same goes for retracement rallies that fail to reach their 'd' targets, particularly if they sputter out at the p 'midpoint' resistance. On the hourly chart, here's a good place to start, since it shows Friday's close to have occurred bearishly beneath p=4583. ______ UPDATE (Nov 30, 5:40 p.m.): Omicron is not what is causing stocks to fall, although a nascent bear market might be. If so, expect more carnage, but then a lulu-of-a-bear rally to suck everyone in and exhaust short-covering. The ostensible reason for the rally will be the debunking of Omicron's supposed threat to humanity. This 'variant' and any vaccine said to cure it are a bad joke, actually, and most of us have grown much too tired of Fauci hokum to believe it, let
The 4905.75 target shown has a good chance of ending the bull market. Even if it doesn't, it is all but certain to produce a very substantial correction that we can trade from the short side. I cannot guarantee this Hidden Pivot will work with the micro-precision you've come to expect from Rick's Picks, since the A, B and C coordinates are a blend of different contract months. But 4905 will be close enough for our purposes, including: 1) staying with the trend until its last gasp; 2) reversing our positions at that time; and, 3) preparing for the onset of the deep economic depression the coming bear market will bring. In the meantime, and most immediately, the 4760 target given here previously remains my minimum upside target for the near term. It is as promising a place to get short as the one at 4724.25 given here last week. That Hidden Pivot caught the top of a 40-point drop within three ticks and could have been worth as much as $2,000 per contract to any subscriber who traded it. ______ UPDATE (Nov 22, 9:44 p.m. EST): Yeah, I'm wondering myself whether today's bull-trap stab up to 4740 was close enough to my number to mark an important top. My gut feeling is that it wasn't, but I'll be paying closer attention in any event to small things that develop in the next few days.
Updates for this vehicle were starting to thicken with interesting but minor targets, so here's a fresh tout that features the most compelling of them, 4760.00. You can still attempt shorting at 4724.25, which looks appealing for a short-term payoff, but the Hidden Pivot at 4760.00 looks like a more likely place for a major top to occur. With nearly 30 points of upside to the lower number, your short-term bias should be bullish, with the goal of building a profit cushion to try something bolder when the prospective top is reached.
The futures were looking like a fabulous short on Friday afternoon -- until they weren't. Around mid-session, the December contract topped a single tick above a 4678.25 target I'd flagged during an impromptu session earlier in the day. The subsequent pullback could have been worth as much as $800 per contract, but the opportunity proved short-lived when short-covering drove this wack-job to an intraday high at 4685.00. That brought the pattern shown, with a 4723.75 target, into sharp relief. For now, use the p2 'secondary pivot' at 4699.13 as a minimum upside objective for the near term. _______ UPDATE (Nov 15, 6:37 p..m. ET): Sellers generated a bearish impulse leg on the hourly chart after the futures failed to achieve the 4699 rally objective flagged above. Now, expect more weakness to at least p=4666.75, a Hidden Pivot with little value for bottom-fishing because it coincides with the intraday low. Its decisive breach would portend more weakness to at least p2=4659.00 or to d=4651.50 if any lower. Here's the chart. ______ UPDATE ( 9:35 p.m.): Short covering has negated the point 'C' high of my bearish pattern, causing me to lose interest entirely in whatever this headless chicken does over the next 12 hours. _______ UPDATE (Nov 16, 4:36 p.m.): Shorting the 4724.25 target of this pattern looks moderately promising. A 'camo' set-up is recommended, but you can use a limit offer and a 1.25-point stop loss if you want to play fast and loose.
The December contract will remain a bull trade at least until the 4760.00 target is reached, probably by no later than Wednesday. Judged on the basis of the pattern shown, and on the unsustainable trajectory of the rally leg begun three weeks ago, the Hidden Pivot target would seem to be an ideal spot to produce a major top. It will be short-able in any case, but we shouldn't get emotionally invested in the notion that we've caught THE top. It will suffice to profit from the expected pullback, and to leave ourselves a small short position for a swing at the fences. Until then, the best way to get aboard with risk drastically minimized is to use 'mechanical' set-ups on the hourly chart or less. Stay close to the chat room and keep 'Notifications' turned on in your account dashboard if you want to be closely apprised. ______ UPDATE (Nov 10, 1:09 a.m.): I posted this chart in the chat room about four hours ago in response to a subscriber's trading query. The pattern and my comments remain viable and were as follows: "Your pattern is fine, but the optimal entry point was at p=4667. 50 when it was first hit at 11:15 a.m. The reversal occurred exactly at the midpoint pivot, and any type of camouflage set-up would have worked to get you long with very little risk. p2=4659.00 is the next place you could attempt to bottom-fish. But p has been sufficiently battered to suggest ES wants to fall to 4650.50. The precise upturn from p implies that there will be an equally precise reversal at D." I note further that ES has since followed one of our tongue-in-cheek rules -- i.e., that all trends reverse at p2 in all time frames, all the time and in
It took all of two days for this jackhammer to punch a hole in what had looked like concrete at 4584. That's a formerly important Hidden Pivot, and it served us well as a minimum upside target for the last 240 points. Now, the ease with which buyers have lifted the futures above it suggests that more upside to at least 4682.50 awaits. This number will be shortable, even if quietly advertised in some circles, but we shouldn't count too heavily on it to magically end the bull market. The next target above it would be 4760.00, which comes from sliding 'A' down a step. That pattern yields a secondary pivot (p2) at 4635.00 where we could attempt to scalp a short using a forgiving 'camouflage' set-up. ______ UPDATE (Nov 4, 11:15 p.m. ET): We long ago ceased to be surprised when our most ambitious rally targets were achieved, but the speed at which this has been occurring in recent months has grown increasingly unsettling. You can still use my 4682.50 target to try shorting, but I'd suggest this only for Pivoteers who know how to reduce the risk to small change using a 'camouflage' set-up.
The most bearish thing I could say about this vehicle is that one would have to have been crazy to take a short position at the closing bell on Friday. The futures had been in a vertical rally for three days with no significant corrections. They stopped a hair shy of an external peak at 4472.00 recorded three weeks earlier, but it looked like a thin reed for bears to lean on. Yes, I'm all for taking bold positions in the 'discomfort zone', and this one verged on excruciating. But barring some headline catastrophe over the weekend -- Mysterious Surge Fries U.S. Power Grid -- there was no reason to think that last week's lunatic leap would not continue. And even the EMP headline might not be greeted with sustained selling, since the usual institutional clowns would find a silver lining in the prospect of yet more Fed stimulus to counteract Armageddon. Here is what I foresee with high confidence, given the week-ending fist-pump through p=4422.25: a push to the 4584.50 target shown in this chart. ______ UPDATE (Oct 23): The futures continued along their rose-strewn path to at least 4584.50, oblivious to...everything. The pattern associated with our target is much too obvious to offer an easy shorting opportunity, since every drooler, village idiot and algo sees it too. However, it seems highly unlikely that the rally will push easily past it. We'll look for trades in real time to squash the risk thereof, so stay tuned to the chat room if you're interested. _______ UPDATE (Oct 26, 9:32 p.m.): The futures came down hard after topping at 4590.00. Although that's just a tenth of a percent above my target, the overshoot is sufficient to leave me mildly bullish once the correction has run its course. How would we know
I sense a melt-up is coming, and soon. Bulls face just one significant obstacle in their quest for new all-time highs: the 4472.00 'external' peak recorded on September 27. Once above it, the old record at 4529 would turn magnetic, drawing the futures higher without seriously taxing buyers; short-covering bears would do all the work. Alternatively, a moderate fall could tell us whether this is likely. Specifically, if sellers drive ES down to the 4314.50 midpoint support of this pattern, an easy penetration would suggest bears are in charge, at least for the time being. It could also set up an enticing bottom-fishing opportunity, since we would be using a very tight stop-loss that anticipated a turn from 4314.50 exactly, give or take no more than a point or two. _____ UPDATE (Oct 11, 8:45 p.m.): So far it looks more like a nascent meltdown. Price action is too nutty in any event to be worthy of our serious attention or even speculation at the moment. _______ UPDATE (Oct 14, 7:54 a.m.): Apologies for the belated update, since I emphasized in commentary that went out Sunday night that this ostensible 'bear rally' is going to new all-time highs. As I also mentioned, DaSleazeballs running this carnival midway show are accomplishing this with short-squeezes in the dead of night, when there is almost no selling pressure. This allows a 'fake' rally to keep on chugging while using up almost no bullish buying power. String together enough phony rallies that surpass previous peaks with stealth rather than power, and eventually you are talking about the real thing, a melt-up.
ES moved more or less according to forecast on Friday. Although I'd touted an avalanche as likely, for scalping purposes I also proffered bottom-fishing guidance in the chat room that caught the intraday lows in QQQ, DIA and ES within a tenth of a percent. I'd intended to trade for a bounce, and that is still what I think we are seeing notwithstanding its seeming power. In Hidden Pivot terms the rally is still a relative weakling, having exceeded just two of six 'external' peaks on the hourly chart. Although we shouldn't presume too strongly against a waxing rally, bulls should still have to prove their case one peak at a time before we resign ourselves to new record highs. (That would not make me more bullish, for reasons I've explained in the current commentary concerning IBM's head-fake in 2009.) For now, use the 4224.75 target shown in this chart as a minimum downside objective. It will remain theoretically valid until such time as C=4469.50 is exceeded. A rally to the green line (4408.31) would trip a 'mechanical' short, stop 4470.00, but I am recommending this trade only to Pivoteers who know how to cut the $12,000 entry risk on four contracts by 90% or more using a 'camouflage' trigger. However, pending a possible tone change Sunday night, your trading bias should be bullish if you can handle entry signals on the sub-hourly charts. _____ UPDATE (Oct 4, 4:28 p.m.): Yet another timid showing by bears, this one failed to take out Friday's low. String together enough such failures and bulls eventually will seize the advantage. Monday is typically their worst day to scare up a bounce, but the herd looked poised nonetheless for a 'turnaround Tuesday'. ______ UPDATE (Oct 5, 5:20 p.m.): Bulls turned things around with a vertical
A manic two-day short-squeeze from Monday's bombed-out lows met heavy supply on day three, thwarting bulls who may have hoped to get it all back before the week ended. Layers of stock from the previous week's heavy chop remain solid and thick, and there's no telling how quickly, or even whether, buyers will chew through it. But if they do and it requires less than the five days it took to pour the concrete circled in the chart (inset), that would imply new all-time highs are coming. We'd have to respect the trend at that point, but not necessarily the seemingly crazy idea that the bull market is headed much higher. _____ UPDATE (Sep 28, 4:53 p.m.): Bears turned docile midway into the session, failing to convert a promising selloff into a bloody rout. They'll have another chance, probably soon, but it could require a nasty rally first to crush short-covering chumps who are preventing a memorable collapse commensurate with the bull market's extraordinary excesses. ______ UPDATE (Sep 30, 6:15 p.m.): It looks like the jig is up for the sleazeballs who have been short-squeezing stocks every night on zero volume, since even the dumbest, most panic-sticken bears aren't going to fall for the same, stupid con four nights in a row. Stocks reversed today off Wednesday night's phony waft and closed on the low of the day. Incredibly, there are apparently enough suckers around at 6:20 p.m. to levitate index futures slightly into the black, but the supply of them is about to dry up. Look for real carnage on Friday, of the sort that leaves investors fearful over the weekend. I will be bottom-fishing in the discomfort zone nonetheless, but only for a high-leverage scalp-trade with penny-ante risk.
