Buyers caved after failing to get much boost from a rigged opening. Sellers were played to exhaustion an hour into the session, but when the obligatory short squeeze sputtered out before lunch, the game was over for bulls. The surprise was that the downtrend in the final hour failed to hold a promising Hidden Pivot support. This put the futures on track to hit the 4372.50 target shown in the chart. This would ordinarily be a can't-lose place to try bottom-fishing intraday, but not on a Sunday evening if the futures open weak. That would waste an especially opportune 'gnarly' pattern, but as we know, there will always be another. Following a decisive breach of 'D', the next logical stop on the southbound express would be 4305.25, derived from converting point 'C' on the chart into 'A' of the new pattern.
The S&Ps are in a topping pattern, a middling head-and-shoulders formation with the potential to send the mini-futures down to 4300 once the neckline at 4500 is broken. Presumably, that would be just the first installment of a full-blown bear market. I seldom pay attention to the H&S because it pops up so often on charts of all time frames, but this one is too shapely to ignore. As noted here earlier, it will take several more weeks to develop a symmetrical right shoulder. This implies there are at least one or two more dramatic swoons to play out, possibly tradeably. I've added a Hidden Pivot pattern to the chart with two immediate trade possibilities: mechanically shorting a rally to the green line (x=4685.63); or bottom-fishing with a 'camo' bid near p2=4577.88. The latter looks somewhat riskier, and that is why I am suggesting that you use a camouflage entry. Nudge me in the chat room if you're interested. I am somewhat surprised that the last rally did not quite reach the 4752 trendline where we were eager to get short, but there is not enough evidence to suggest we were front-run. Regardless, let's continue to avoid patterns that are obvious, since every Tom, Dick and Harry is trying to get short at these levels. _______ UPDATE (Jan 18, 10:36 a.m.): The futures have bounced robustly from within two ticks of p2 pivot noted above. This provided an opportunity to get aboard for a quick profit on four contracts of as much as $2,700. Review the chat room discussion beginning with my 9:53 a.m. post to see how the trade unfolded in real time. If you want to learn how to do it yourself, as many subscribers have, you should attend the Wednesday tutorial sessions and immerse yourself in the
The supply-and-demand logic of the chart shown predicts a potentially important top at 4752.00. This is not a Hidden Pivot resistance, but rather a price along a trendline that explains itself. The very gentle slope of the line is determined by two peaks where anyone who bought got crushed by what happened next. All of these losers have been praying for the last month or so to get out 'even', and they may just get their wish. But I doubt they'll come away with much of a profit, since there's a dome of copious supply just above the line (which can be shorted with a stop-loss as tight as you can handle.) There is no way buyers will get past the trendline on the first try, and if their efforts continue for a few more weeks, that would eventually create a head-and-shoulders pattern. It would require perhaps 20-25 days to accomplish this, assuming the right shoulder develops with the symmetry common to H&S formations. The foregoing doesn't negate the 4907.75 bull-market target I've been drum-rolling here for quite a while, but it does give us a more modest objective that could prevent an important downturn from somewhere shy of 4907.75 from catching us unawares. _______ UPDATE (Jan 13, 6:43 p.m.): We got chumped out of an enticing short when buyers failed to push this hoax up to the trendline. The line seems too eclectic to have been front-run, but we'll never know for sure. There's still tons of resistance there in any event, so we'll have to figure out another way to get short if and when the futures rally back up to the line. In the meantime, I expect a tradeable bounce from very close to p=4631.75 in this chart to confirm the pattern and its 4524.00 downside target.
We'll treat last week's stall-n-dive as just an annoying detour on the way to a 4907.75 rally target that still looks likely to be reached. It is odd nonetheless that sellers were unable to put this gas bag down on Friday with a concerted push toward D=4585.25 of the small 'reverse' pattern shown. Powell had ratcheted up his tapeworm twaddle to the max earlier in the week, and although T-Bonds acted as though they actually believe the guy, stocks evidently know better. Still, ES is in the throes of a 'Matt's Curse', having peaked almost precisely at the 4803 secondary pivot, When this happens, odds of a corrective crash through the 'C' low -- in this case 4485.75 -- supposedly rise. _______ UPDATE (Jan 10, 5:33 pm.): It took two tries, but a trade I recommended in the chat room at 10:53 got traction just ahead of today's 90-point rally. Several subscribers appeared to have jumped on it, so I tracked the position and provided detailed suggestions for managing the risk as the day wore on. Check it out and see whether you could have followed my advice. It included the use of a 'dynamic' trailing stop, a concept explained in my running commentary. I'd suggest moving to the sidelines for now, since the session ended with bears hanging on the ropes.
The futures have rolled down from a logical spot, a secondary Hidden Pivot at 4802.25 tied to our bullish lodestar at 4907.25. I've added a smaller 'reverse' pattern with a target at 4663.00 so that we can gauge the strength of correction and exploit it 'mechanically' for trading purposes. It tripped a short at 4756.50 on Friday, but I did not advise taking the trade ahead of the long weekend. Sliding 'a' up to 4743.25 (12/16) produces a correction target as low as 4576.75, but we'll be better able to judge its validity and usefulness once we've seen how sellers handle the respective midpoint supports at 4731.25 and 4688.25. ______ UPDATE (Jan 3, 9:19): Although sellers were spent on the opening bar, DaBoyz failed to take advantage. Even so, it is bullish that the downward spike that began the session couldn't even reach the midpoint Hidden Pivot support at 4731.25. _______ UPDATE (Jan 5, 8:46 p.m.): Very suspicious. The futures dove today after stopping out a hypothetical short last week from p2=4802.25 by a hair. 'Matt's Curse' is in effect, so we shouldn't be surprised if the downtrend accelerates into week's end. _______ UPDATE (Jan 6, 7:57 p.m.): 'Matt's Curse' implies that very sharp reversals become more likely when they begin precisely at the p2 secondary pivot. In this case, the trend did in fact fail just a hair from p2=4803.75 of the bullish ABCD pattern shown, and we should therefore be prepared to see sellers take out the pattern's point 'C' low at 4485.75. I have drawn in a secondary 'reverse' pattern for trading purposes -- in this case, a potential 'mechanical' short on a rally touching x=4752.50,;or a bottom-fishing attempt at d=4585.25.
The felicitously gnarly pattern that I introduced here Wednesday night worked like a dream, signaling a huge 'mechanical' winner on the short side and keeping us properly skeptical for the duration of a vicious, two-day short squeeze. The clock ran out on us before the chiseled-in-stone downside target at 4478.75 could be achieved, however. It remains theoretically viable, even if not as enticing for bottom-fishing as it would have been on Friday at mid-session.
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.
