E-Mini S&P

We'll use the minor rally pattern shown, with its 1811.00 target, to determine whether the recent, 80-point decline was as much relief as bears are going to get. Night owls should note that a minor buy signal has already been tripped at 1798.75 (see inset).  Now, if buyers can push past the midpoint pivot at 1802.75 without difficulty, the 1811.00 objective would become a lead-pipe cinch. Anything above 1811.00 would exceed external peak #1, refreshing the bullish energy of the lesser charts for, presumably, the remainder of the week.

DaBoyz deserve credit for being able to coax the futures into a modest uptrend Monday night despite the fact that AAPL is getting the crap knocked out of it following the announcement of punk earnings after the close. No doubt, DaSleazeballs are getting help from dismally stupid buyers, including a few who are all too eager to cover shorts following a rare, so-far two-day selloff. My hunch is that the action could get pretty wild on Tuesday, but that sellers will prevail by day's end.  'Camo' traders will probably need to zoom down to the 3-minute chart or less to play the swings conservatively.

When sellers outnumber buyers on a Sunday night, the arse-bandits who run this gaff typically take the index futures down far enough to exhaust supply;  then they wait for a few buyers to show up so that they can goose the E-Minis higher on little or no volume.  Tonight, however, timidity apparently rules, since there is insufficient interest on either side of the market to jockey ES around.  The futures are currently trading an insignificant 1.75 points higher after being down as much as 7 points. My hunch is that if the broad averages open moderately higher Monday morning, ostensibly on good earnings news from Caterpillar, you had better look out below, since it would mean that that's the most DaBoyz are capable of milking from opportune news.  Whatever the case, we'll be able to read their hole cards after we've seen how a follow-through attempt to the downside (see graph) interacts with the midpoint pivot.

The futures played toe-sies with an 1842.75 midpoint resistance all day long on Wednesday but failed to get past it. My hunch is that it will succeed today. In any case, if and when 1842.75 is breached by more than 1.00 point, expect the rally to continue to at least the 1859.25 target shown.  If you're long for the ride, I'll suggest reversing the position and going short with an 1860.25 stop-loss.  If you hold no position at all, you can short up to four contracts there provided you use 'camouflage'. _______ UPDATE (January 22, 11:00 p.m. EST):  The futures  have been down as much as ten points Wednesday night, a decline of sufficient magnitude that we might infer that something is amiss in the geopolitical world.  My hunch is that it's the usual sleazy opportunism at work -- a shakedown prompted by who-knows-what-news.  If I'm right, selling should dry up overnight with the futures having gone no lower than the so-far bottom at 1828.75. If, on the other hand, sellers take out Tuesday's 1826.25 bottom, that would be mildly interesting, since it would generate a bearish impulse leg on the hourly chart.

If you got short on New Year's Eve near the major Hidden Pivot target at 1846.75 discovered by chat-room regular 'Pietdup', you should be starting to see the problem by now. Clearly, nailing the all-time high within a single tick confers no license to simply forget about one's short position while it racks up profits over days, weeks and months. In fact, the futures have been head-butting the high nearly every other day lately, following up with swoons that will have lulled many a bear into thinking things were going swimmingly. The problem of shorting the potential Mother of All Tops becomes even more difficult if you have used put options to cushion yourself against the inevitable swings. We did so in the Diamonds, but the puts even on good days have done no better than merely hold their own against time decay. Well, I never said it would be fun. Or easy. In any case, there's not much more we can do right now -- other, perhaps, than wait for a head-fake to new all-time highs. If this should occur via a rally into the range 1850-1860, we should look diligently for a way to get short via camouflage. In practice, this would entail catching a downtrending abc on a chart of perhaps 5-minute degree or less. Presumably, this would occur shortly after the futures have rallied to the 'D' target of a minor ABC rally. That's how camouflage works, and it is the best way I can think of to take advantage of the kind of last-gasp, short-squeeze spike we should be expecting. Why should Mr. Market let any bear who is currently short escape without fatal impalement? More pain likely awaits, but we can console ourselves with the notion that it will be felt most acutely by

The 1846.75 target we used to pinpoint the S&P's all-time high on New Year's Eve has held up pretty well, having survived 15 days worth of pooch-screwing, two head-butts and a five-day rally that sputtered out just shy of the pivot. Although we shouldn't depend too heavily on it to stop the bull market in its tracks, it has been pleasurable to think that it might. We hold a short position via some DIA puts, but I'd encourage you to 'camo-trade' your way aboard from these levels if a low-risk opportunity should present itself.  On the 5-minute chart (see inset) there is one significant downtrending abc pattern that has already tripped a sell signal, and one very minor pattern going the other way that has yet to reach its target. I've labeled both to help you get your bearings, but the bottom line is any downtrending a-b impulse leg on the '5' would be reason to get short. _______ UPDATE (7:32 p.m. EST): Two seconds after I published the above, DaBoyz, evidently sniffing bear meat, lifted this erstwhile cinder block four points in the blink of an eye. My hunch is that they've overplayed their hand, but because the move is strongly impulsive on the lesser charts, we'll need to be back off the idea of putting out a mellow short.

Bulls are having obvious difficulty pushing past the all-time high achieved on New Year's Eve, a Hidden Pivot target that had been more than a year in coming. However, they've made things so unpleasant for shorts since then that they should be deemed well capable of forging into new record territory, and soon. A small pullback for a running start could yield a tradable opportunity for night owls to get long, based on the pattern shown. The 'D' target at 1831.75 can be bottom-fished with a stop-loss as tight as 1.00 point. Because this Hidden Pivot support coincides with structural support from lows made three days ago, it's worth no more than a single-contract bet. If the order fills and the position goes in-the-black, you'll need to implement a trailing stop from 1835.00 on up.  Note: The foregoing does not preclude the possibility that a far more significant correction awaits. I would lay 2 to 1 against it at the moment, but the futures could conceivably correct all the way down to 1694.50 without picking up much support. In any event, the longer they butt up against the old high without getting past it, the greater the chance of a serious tumble. _______ UPDATE (12:05 p.m. EST):  The futures traded no lower than 1833.75 overnight, so we did nothing. (Note: We did, however, get short in DIA using put options that had been recommended.)

The futures are once again banging on the 1846.75 rally target that so precisely contained the bullish stampede at year's end.  I'd said it would take at least 5-7 days for the S&Ps to return to their old high, assuming bulls were still as feisty as they were in the last half of December; in fact, it has taken 10 days. The differential is not sufficient for us to infer weakness or even hesitancy on the part of buyers, and we should therefore look for a quick stab toward the 1863.25 target given here yesterday.  The futures are no less a bull trade than they were yesterday, when I advised such. But they will become a 'spec' short nonetheless at the target, if tightly stopped. _______ UPDATE (11:14 a.m. EST):  With no news on the tape this morning worth caring about, the hesitancy of the futures to push into new record territory should be regarded as a perfunctory marking of time.  The pullback has already exceeded a minor, ugly 1836.50 target, implying that still lower prices are coming.  If so, look for a tradable turn from 1833.50.  This target is not of the highest pedigree, and so it should be bottom-fished, if at all, only with camouflage.

Tuesday's rally can serve to remind us that bulls are easily capable of reversing a nasty selloff like the one that began the week and turning it into the all-too-familiar swoon. Although they didn't quite recoup all of Monday's losses with yesterday's surge, they looked to be in good shape to do so today -- and then some. The 1863.25 target shown implies that traders positioned from the long side will have 30 points of upside to work with.  If you are long when the futures get there, I'll suggest applying some of your gains to a stop-loss on a short from that price.  This Hidden Pivot may not contain the mindless herd for long, but it still looks like a good bet to produce a tradable reversal.