E-Mini S&P

Inches from the 1842.25 correction target shown, the selling was very nearly maxed out at yesterday's lows (see inset), technically speaking. The actual turn came from 1844.00, exactly 1.75 points above the bottom we might have projected, and although this might have been mildly expected, what surprised was the hysterical short-covering that drove the rally. Had this panic not occurred, the unthinkable would have resulted -- i.e, a third consecutive down day on Wall Street.  It was not to be, however, and now the only that remains is whether this will be the rally that propels the S&Ps to new record highs, or merely yet another failed tease. In the meantime, gratuitous 80-point swings such as we have seen in recent months will most surely be tradable.

I had to play with the time frames to get a chart that displayed a pattern I somewhat like.  The one shown will do, although you should allow for the possibility that a higher point 'C' will be created before this vehicle embarks on second leg down. If so, assuming the p midpoint support is not closely coincident with any of the 'external' lows made during the recent rise, it could afford an excellent opportunity to bottom-fish with a tight stop-loss.  Don't hesitate to ask about this in the chat room, since the trading opportunity in prospect could prove suitable even for relative novices. ______ UPDATE (10:36 a.m. ET): In the chat room this morning, I flagged a Hidden Pivot at 1856.50 as an enticing spot to try bottom-fishing. Alas, the bounce we were expecting came from 2 points above it.  At the moment, the futures have racked up 13 points since bottoming.

The leaps have been opportunistic, powered by short-covering whenever the mood is right. Most of the time these days, however, the futures are taking mincing steps in both directions, creating a challenging environment for profit-seekers in the middle hours of the day. One thing to notice, however, is that the rallies, particularly in this vehicle, and whether weak or powerful, seldom proceed from the first signaled entry point.  Instead, the 'money trades' launch from a second or third point-C lows of ABCD patterns, and they do it with such repetitious reliability that one can practically discard the first signaled entry opportunities routinely. This is the kind of price action we might expect when 'everyone' thinks that stocks will move higher on a given day. 'Everyone' can be right, but that doesn't necessarily mean they can make money easily. For your interest today, I am including a chart that shows a modest rally target at 1895.00. I'm guessing it will be easier to get short there with a tight stop than to get long for the ride to it. However, because the futures will be in record territory at that point, we shouldn't want to impede their progress too aggressively. _______ UPDATE (April 24, 12:50 a.m.):  With yesterday's rally -- nearly all of it achieved in a single, short-squeeze bar toward the end of the session -- bears are now trapped between the all-time high and a lesser peak just below it. Their acute, growing discomfort will likely be tradable, but not by way of any specific guidance I am able to provide nine hours before the opening bell.  New record highs are coming, but for most traders, the process of getting there promises to be more pain than pleasure.

An entire day spent screwing the pooch failed to lift the futures above a modest but technically important peak at 1867.50 recorded last Thursday. Once this happens, it is almost certain to turn bears fearful, causing the flurry of short-covering that seems destined to push this gas-bag to new record highs.  The foregoing is not a done deal until the peak has actually been exceeded, but traders looking to get a piece of the action should zoom in on any print above 1867.50, since the subsequent pullback could yield a relatively low-risk entry opportunity.  Such a pullback would be more useful if it occurs relatively quickly (and by 'quickly', I mean within 30 seconds to two minutes of the upside breach). This implies that you should probably look for your entry signal on the 3-minute chart or less. _______ UPDATE (10:01 a.m. ET): The 3-minute chart tripped a 'camo' buying signal at 9:48 that worked: A=1863.00 at 8:15 a.m.; B=1868.25 at 9:36; and C=1865.75.  If you were on the one-minute chart, however, there was one false entry signal before the rally began in earnest.

Late Sunday night, it's anyone's guess whether DaBoyz are fixing to run stops above the 1867.50 peak shown. That's assuming there's enough short-covering fear to pull it off, which appears not to be the case at the moment. Far more ambitious would be a push above the April 4 peak at 1892.50 to new all-time highs.  Assuming that's about to happen, it's highly doubtful it will be by way of an impulse leg that exceeds both of the peaks in a single, unpaused leap.  More likely is a push today above peak #1 that would probably spell death-by-Chinese-water-torture for shorts in the days ahead. In any event, your trading bias should be bullish above 1867.50, with entry based on whatever uptrending ABC 'camouflage' patterns you can find on charts of 15-minute degree or less. Keep in mind that the first such opportunity signaled, as opposed to one further along in the uptrend, would be the least risky to trade.

The bearish impulse leg that bottomed on Monday at 1803.25 was a strong one (see inset), having exceeded no fewer than three prior lows, two of them 'external', on the daily chart.  A retracement is overdue, and I would be very surprised if the futures were to first rally above Thursday's 1867.50 high.  Whatever happens, we should pay very close attention to sellers' next encounter with a midpoint-pivot support on this chart, since its serious breach would suggest that the long-term bull market is either waning or over. Assuming Wednesday's 1857.00 peak endures as a short-term top, buying at the implied midpoint pivot at 1824.25 would become a very enticing speculation.  Please note as well that an 1840.75 print (i.e., the green line)  would trip a short to at least 1824.25.

It was just coincidence that yesterday's edition of Rick's Picks led with a headline about schizophrenia, since a market-watcher could not have asked for a better demonstration of it.  At the opening, the futures head-faked the equivalent of 100 DJIA points; then they plummeted the equivalent of 250. Just when things looked darkest, short-covering by bears too stupid and frightened to know when to sit tight drove the futures into a spasm that recouped earlier losses and then some. By day's end the futures were up 18 points, bears were cowering, Wall Street was jubilant and all was right with the world. I won't hazard a guess as to where this freak show will head tomorrow, but I should warn bulls nonetheless that the night session is unlikely to deliver much more upside than the 1845.50 target shown.  Above it, perhaps after Wednesday's opening bell, an 1851.75 target will be in play. However, if you plan on intercepting it with a short offer, you had best do so only if you've caughta piece of the rally.

Yesterday's price action was the stock market's equivalent to rectal itch, about which no one but a proctologist at a medical meeting should have much to say. It provided no clues about whether the next big move will be higher or lower; it was best traded by betting against the continuation of any trend that looked like it was about to become even remotely interesting; and it pointed to no particular outcome on Tuesday. That said, I have reproduced a daily chart to remind you that the bear leg begun last Thursday is strongly impulsive. Bulls could dispense with the threat thereof by rallying this vehicle to new record highs, which would exceed the requisite two prior peaks on the daily chart. Failing that, however, they will need to make their stand at the midpoint pivot of whatever follow-through c-d decline is about to occur. I have sketched this out, since price action at the still undetermined 'p' will be crucial to our understanding of the much bigger picture. _______ UPDATE (11:04 a.m. ET): Assuming today's 1837.25 high holds, the chart accompanying this tout projects minimum downside to p=1805.00, or a worst-case low over the near term at D=1773.00. This morning's 'obligatory head fake' was not exactly unexpected.

The bottom of Friday's slide came within 1.50 points of the 1805.75 target I'd supplied. A 10-point rally ensued, and although one could have gotten aboard using the larger of the two patterns shown, the subtler one labeled in purple would have nipped you for small change first. The action has since turned characteristically pointless, and, true to its new, robotized, lobotomized personality, ES is not giving away any berries Sunday night by way of attractive 'camo' patterns. Rather than suggest that night owls look for camouflage that even I can no longer find in this vehicle, I'd suggest initiating trades 'old-style' by going against the trend at D targets of not-too-obvious patterns.  One such target is 1789.25, which can be found on the 60-minute chart using the following coordinates: A=1866.50 (4/10 at 10:00 a.m.); B=1823.75 (4/19 at 4:00 p.m.); and C=1832.00 (4/11 at 4:00 a.m.). _______ UPDATE (10:42 a.m. ET): This mirage went no lower than 1803.25 overnight, denying us an opportunity to bottom-fish my target. The rally since is impulsive on the hourly chart, based on these coordinates: a=1811.25 at 7:45; b=1824.75 at 9:45; and c=1818.50 at 10:15.