E-Mini S&P

Bulls made lazy by the impending Memorial Day holiday aren't entirely to blame for yesterday's somnambulant rally.  Turns out the intraday high closely coincided with the respective 'D' targets of two ABC rally patterns. Double stopping power.  The larger and more important of the targets is shown in the chart, but there was also a minor 'D' Hidden Pivot at 1882.50 (labeled in purple) that was flagged in the chat room and which ultimately was exceeded by two ticks.  Although the rally was from Dudsville, it should be presumed self-sustaining for at least another day or two, for a couple of reasons. For one, shorts were pinned on the ropes the entire day, there having been no pullbacks greater than four points; and there they remained at the closing bell.  For two, the Masters of the Universe left nearly 20 points of running room between the end-of-day settlement price and new record highs. This means They can manipulate this vehicle at least somewhat higher Tuesday on merely vaporous buying before traders start feeling jittery about what might happen when it wafts into record-high territory again.  The last several such forays have been swiftly rebuked, and although seasonality will strongly favor the bulls ahead of the holiday, buyers could just as easily turn skittish on the realization that they've hoisted this erstwhile cinder block just a scoach higher than whatever the day's headline hum-drum might properly allow.

Short-covering recouped only half of the Thursday's losses --a particularly timid showing for a Friday. Since the subtle delicacy of my last trading idea was trashed by the indelicate thrashing of bulls and bears trying to knee-cap each other ahead of the weekend, I am not going to offer any clever day-in-advance suggestions for Monday. Suffice it to say, Thursday's downdraft created a bearish impulse leg on the daily chart that was still very much in effect at the final bell, even if buyers were momentarily on-the-ascendant.

The picture-perfect downtrend shown in the chart could easily get bent out of shape by the time you read this, but the single-bar coordinates that define it thus far look promising for helping us determine whether the selling is likely to continue or perhaps even gain momentum. Bulls should be hoping for a bounce from a p midpoint support that is yet to be determined, since that's what bull-market corrections tend to do.  But if the midpoint pivot should be easily exceeded, or, heaven forbid, the D target of the pattern gets obliterated, it could spell big trouble for bulls. Traders can bottom-fish at p or D, but if at the higher number, camouflage is advised, since it closely coincides with the billboard-obvious low recorded on May 7.

Two steps forward, one-and-a-quarter steps back. I'd said somewhat facetiously that it might take forever for this vehicle to reach a very modest rally target at 1917.25, a minor Hidden Pivot, but I'm starting to fear that I may not have exaggerated.  The problem is that none of the clowns who make their living throwing Other People's Money at the market are any more bullish on stocks than you or I.  With the real estate sector's dead-cat bounce at an end, and retail sales not getting much lift from the supposed trough of a snowy winter, even the clowns are having trouble finding excuses to push shares to new record heights. The result is that any buying whatsoever would have to come from short-covering, which requires good news for fuel. But how good can the news get?  The stimulus story has been milked for all that it's worth, and headlines from the geopolitical world suggests only that America's standing in the world has collapsed under the leadership of the most grossly inept, unqualified man ever to occupy the White House. From a technical standpoint, and most immediately, look for the expected finishing stroke to 1917.25 once the correction begun from yesterday's feeble peak has run its course. Night owls should look to do any bottom-fishing at the midpoint-pivot supports or 'd' targets of downtrends visible on the 5-minute chart.  The chart shows a couple of such price points for your further guidance. _______ UPDATE (5:09 p.m.):  Given today's carnage, it might be more correct to say of the stock market that it's been 'one step forward, five steps back'.  Have we entered a bear market? Or will stocks have one last hurrah, trapping bulls at record heights with one swift, fatal blow?  I am adjusting my own thoughts about such

Finally, the breakout we've been waiting for!  I  provided some big-picture targets as high as 1970.50 for this rally in yesterday's tout, but for trading purposes you should focus on the more immediate one at 1917.25 shown in the chart. The implied 24 points of upside from current levels leaves room for night owls to make a modest score, but I suspect that easy entry opportunities will diminish and perhaps vanish by Tuesday's opening bell.  If you have the good fortune to catch a ride to the target, consider reversing the position and using some of the implied profits to cushion the stop-loss of a short initiated there. _______ UPDATE (May 13, 6:49 p.m.): This is one of the most half-baked breakouts into record territory that I can recall, despite the fact that the news media have been duly trumpeting the event, such as it is. Our minimum upside target for the very near-term remains 1917.25, and at the rate bulls are going it could take a week for this vehicle to cover the requisite 19 points to the target. Keep in mind that there is zero bullish buying at this point, only short-covering and the inexorable flow of OPM thrown at stocks by mostly-clueless money managers who couldn't hold down a CETA job if they were forced to live by their wits.

Three weeks of relentless head-butting have failed to punch past the midpoint pivot resistance at 1887.00 shown in the chart.  My gut feeling is that bulls will eventually succeed -- with crucial help, as always, from  panicky short-covering. In the meantime, however, the futures may have to go lower first to get the running room they need to accomplish this modest feat. Whatever the case, a two-day close above the pivot would signal their readiness, and traders should regard such an occurrence as a low-risk buying opportunity.  Upside potential would be to 1970.50, the 'D' target shown.  That would equate to a Dow rally of about 800 points from current levels -- still a tad shy of the 17622 bull-market target we've been using for quite a while.

Although my long-term forecast calls for a rally to new record highs, the ponderous toppiness we've seen lately suggests the futures may have to fall at least somewhat lower before they can move significantly higher.  That would give them the running start they need to blast free of supply that has been accumulating since early March. In the accompanying chart, notice that the bull market has stalled almost precisely at 1887.00, a 'midpoint Hidden Pivot'  indicated by the red line. Although it would require a crystal ball to know whether the S&Ps will eventually break through it, should that happen it would strongly support the case for a continuation to -- precisely  -- 1970.50, the next major Hidden Pivot above. Meanwhile, there can be no assurances that the correction-then-a-running-start scenario will play out to the satisfaction of Wall Street.  Indeed, with the real estate sector relapsing, possibly fatally, and Fed stimulus barely able to sustain even marginal GDP growth, it seems most improbable that significant new highs await.  Regardless, any fall from these levels will gain increasing authority, if not to say ominousness, with each prior low it exceeds on the daily chart. Two such lows would be breached on a mere 18-point decline to 1843.75.  Two others, both more significant, would have to give way before we could know almost for certain that the bull begun 62 months ago is over.

It's late Sunday night, and the futures have traded a single tick beneath Friday's low, generating a bearish impulse leg on the hourly chart.  The  breach is subtle enough that it could conceivable lend itself to a 'camouflage' shorting opportunity.  I've sketched  out what this might look like for your guidance.  If this gambit triggers, it will almost certainly happen when most traders are sleeping.

Zzzzzzzzzzzz. Sometimes after a quick rally-and-retracement the follow-up leg takes so long to reach its Hidden Pivot target that we forget it's there. Make no mistake, however:  The 1884.75 target shown is what the futures appear to have struggled all week to achieve (or perhaps exactly 1894.00, an alternative target). Yesterday's gratuitous swings brought the June contract inches closer to this very modest goal, presumably so that the week can end with enough excitement to put a spring in our step and a song in our heart as the weekend begins. Note that despite the surly pointlessness of yesterday's price swings, the futures managed to exceed a bullish threshold I'd mentioned earlier at 1882.50 by a single tick. That made the four-hour slog that followed ostensibly corrective and therefore, at least in theory, a buying opportunity. However, because four such opportunities died trying to get off the launching pad yesterday, I'm not going to pretend there might be something interesting for you to do today. Instead, we'll let the press tell yesterday's story in their inimitable way, avoiding as always the inference that the stock market 90% of the time is a dead zone, as bereft of meaningful activity as a tumbleweed farm. _______ UPDATE (10:52 a.m.): On the hourly, a major target at 1970.50 is coming into focus. (A= 1725.25 on 2/5/14). This pattern has a midpoint resistance at 1287.00, which is where ES appears to be stalled.