E-Mini S&P

Notice in the accompanying chart that the futures tripped a buy signal at 1824.40 last Thursday, subsequently reaching the 1831.50 midpoint pivot where half the position could have been exited for a partial profit. The 1845.80 D target was narrowly missed, but a move above it today, especially one that fails to exceed the #3 external peak at 1846.50, could generate a very subtle, and therefore very appealing, 'buy' set-up. Keep in mind that it is obscurely impulsive patterns such as that, that afford us entry opportunities designed to take advantage of the fear and confusion of others at breakout points. _______ UPDATE (11:12 a.m. EST):  Somehow forgot to mention this last night, but 1859.50 is where this stupid rally is going most immediately.

I don't pay much attention to head-and-shoulders patterns because they are everywhere one wants to see them. Even so, at the intuitive level, the inverted h&s shown in the accompanying chart looks more like accumulation than distribution. Under the circumstances, it seems very likely that the futures will soon ascend to new record highs, even if few of my fellow forecasters seem eager to go out on a limb with a specific prediction.  The weekly chart suggests 1945.00 is possible, but the March contract would first need to blow past the 1838.50 'midpoint pivot' associated with that target. A problem with this scenario is that a move to 1945 would not get the Dow to an analogous target at 17622 that I disseminated here earlier. There's always the possibility that the Dow will lead the S&Ps on the next surge, but it has been such a laggard so far -- lacking, as it does, the whack-o high-flyers of the Nasdaq -- that this seems unlikely. All things considered, I'll put more weight on the S&Ps than the Dow, with tracking guidance henceforth based on the 1945 objective. To further clarify: Odds of a rally to that number will shorten if buyers leave the 1838.50 'midpoint' choking on dust within the next several days.

Bears have tipped their hand Wednesday night with a snapback rally that failed at the midpoint pivot of the pattern shown. The implication is that the futures are now going to fall to at least 1812.75, perhaps in mere hours. It is probably too late for night owls to get short at the midpoint unless there's a feint back to it, but the D target can be bottom-fished via camouflage or with a limit bid and a stop-loss as tight as 1.00 point. ______ UPDATE (12:01 p.m. EST):  The futures went no lower than 1817.25. Thereafter, the likely best opportunity of the day came via a buy signal at 1824.00 (15-minute, A=1819.25 at 8:30 a.m., B=1831.25).  No one in the chat room reported taking the trade, but I have supplied provisional guidance nonetheless in posts logged around 10:35 a.m..

Tuesday's timid feints in both directions were not even worth the day trader's time, much less a reason for anyone to change one's outlook, be it bullish or bearish. My gut feeling is that the S&Ps will tank after making a marginal new high. However, so many of my colleagues evidently envision the same scenario that we must remain on our guard against a collapse without the usually obligatory head-fake. Its purpose would be to discomfit bulls as badly as bears have been discomfited by February's short-squeeze rally. By now, though, even without a last-gasp thrust, bulls are probably sufficiently complacent to ride that first leg to hell without even realizing they're aboard. We'll keep to the sidelines for now, but you should stay tuned to the chat room if you're interested in taking whatever pot-shot opportunities may arise in the course of the day.

DaBoyz turned timid Monday night, unwilling to bet that Friday's short squeeze had enough power to continue into a new week.  I'm betting the squeeze resumes within a day or two, although I doubt that it will unfold this morning. Regardless, camouflageurs contemplating aggressive play should take note of the three external peaks that I've labeled in the accompanying chart, since they could provide a perfect set-up for exploiting the fear, chaos and greed of traders who do not understand the difference between a double-top and an impulse leg.

Factor out the hiccup at the opening (see inset), and yesterday's price action amounted to an unusually boring day. Are shorts finally starting to mellow after taking it in the, ahem, shorts for six straight days?  It would seem so, and that would imply stocks will be less buoyant, or perhaps even leaden, in the days ahead. There was a whiff of short-covering fear in the final minutes of Tuesday's session, when the futures spasmed five points higher in a minute. But if trading on a whim, I'd rather have gone home short than long. Even so, we should view any pullback as prelude to thrust that will challenge the all-time highs. Accordingly, you should look for a bottom-fishing opportunity in any downtrend that runs out of steam at its p or D Hidden Pivot.  ________ UPDATE (Feb 14, 2:06 p.m EST):  The latest installment of the Mother of All Short Squeezes is on its way to exactly 1841.25, a Hidden Pivot rally target I posted in the chat room several hours ago.  I've suggested shorting there only to those who were long from 1823.25, the best 'camo' buying opportunity of the day. I wouldn't suggest carrying a short position over the weekend, however, since the futures seem all but destined to close within spitting distance of December's all-time high.

For the fifth straight day, bears grabbed hold of their own scrotum and yanked it as hard as they could.  The result was a 200-point short-covering rally that put the Dow within easy distance of all-time highs achieved on the final trading session of 2013. It will probably take a few weeks for the news media to reverse the bloody tide of downbeat stories they've spewed in the last few weeks. But with some help from screaming stock prices, it shouldn't be long before we are reading once again about supposedly boom times around the world.  Assuming business writers pick up where they left off a month ago, when the music stopped, it'll be with stories about how investors are flocking to, of all places, Spain, the apparent "in" spot for bargain hunters. Despite the foregoing, and reinforced by gut feelings, I'll be inclined to try shorting again at whatever juicy Hidden Pivot rally target materializes just above December's highs.  Let me explain.  It's safe to assume that gutting and disemboweling bears, as has occurred these last few  days, will not suffice to quell demand for stocks.  A more fitting top for the five-year bull market would be one that sets up bulls for equal devastation. And that is why I favor the bull-trap scenario of a stock market imploding after it has rallied to a marginal new high.  Bulls would be "all in" at that point, and an avalanche commensurate with the scope of a global deflation that has been gathering irresistible force could then commence. Fortunately, we have a substantial paper gain to play with from a short position initiated by subscribers before stocks plummeted in January.  A chunk of the theoretical profit ($1920) was deployed buying some DIA puts last week, but we took our lumps exiting

Shorts continue to wring each other's necks, driving stocks into a parabolic rally that threatens not only to erase January's hard-won gains to the downside, but to send the broad averages into new record territory. In after-hours trading Monday night, bears looked ready to extend the vicious short-squeeze begun last Wednesday into a fifth straight session. Action earlier in the day had been subdued, with the Dow finishing little changed. But with few sellers around at the moment and on very light volume, the futures are steadily inching toward the 1800.50 target (see inset), a Hidden pivot. It is clear enough that I would ordinarily suggest getting short there. You can try it, but only via a 'camouflage' entry strategy that would subject you to initial theoretical risk of no more than five ticks per contract. If the target gives way easily, however, a further run-up to the mid-1840s, where the E-Mini made its highs in January, would become likely.  Alternatively, traders looking for a ride higher should try to leverage a B-C pullback from a tick or two above late January's 1801.25 peak. The entry trigger would likely come very quickly off the 'C' pullback low, so be ready to act if the opportunity presents itself. _______ UPDATE (10:30 a.m. EST): For purposes of getting long, today's price action has dished up only garbage, even for the most diligent and alert trader.  To get long anyway, I'd suggest using only set-ups that are perfect or very nearly so from a 'camouflage' standpoint.

Friday's employment news held no clear meaning for anyone, but that didn't stop the usual suspects from freaking out for five minutes anyway. The tracks they left on the 5-minute chart (see inset) pointed to a further rally to at least 1800.00, but bears shouldn't count too heavily on that Hidden Pivot resistance to quell the histrionics. Sunday night-owls, on the other hand, may be able to grab this rabid weasel by the tail, since there is an implied seven points of upside to trade between here and the target. The futures could very well get there on the opening bar, so don't sweat it if you miss the move.  The next appealing bull trade would probably have to wait until 30 to 60 minutes before Monday's opening bell.