E-Mini S&P

DaBoyz are exploiting short-covering hysteria for all it's worth Monday night, goosing the futures 7 points so far. This was to be expected, but no one should be fooled into thinking bulls are going to come roaring back after taking such a powerful body blow. Even so, they'll have a chance to initiate a vicious counterattack from the 1724.25 target shown. You can bottom-fish there for a single contract, using as tight a stop-loss as you can abide; however, if there's a solid opportunity to get long via camouflage, four contracts would be okay.  Please note that if the target, a Hidden Pivot support, gets demolished the futures could fall to as low as 1705.50 (a hidden support that also could be bottom-fished. It is derived by using the lowermost B-C pairing available: 1761.25 and 1788.25, respectively.)

The drift was lower last week, but the gratuitous swings that punctuated it --  low...high...low...high...low  -- must have taken a toll on bulls and bears alike.  The former appeared to hold a small edge at the final bell nevertheless, although they'd need to achieve a minimum 1794.00 today to solidify it. Night owls can use the 1770.00 target shown to bottom-fish, but you'll be on your own if the order fills in the wee hours.

The curiously orderly gyrations of the past week have thus far held above a crucial low at 1754.00. Its breach would create a technical storm cloud that we haven't seen in a long while -- i.e., a bearish impulse leg on the daily chart. My gut feeling is that the mess will resolve to the downside, but that the next important low will set the futures up for a rally to new record highs. We'll be better able to judge the likelihood of this once we've seen this vehicle either break down, or break out (ever so mildly, to start with, via a push on the hourly chart above above 1816.00).  For the time being, however, the E-Mini is for day traders only.

The rally sputtered out a point-and-a-half shy of a midpoint resistance at 1802.75 that we were using as a minimum upside target. The consequences were worse than I might have expected, and bulls appeared to be hanging on the ropes when the bell rang. If they are still on the defensive when stocks open Thursday morning, look for the selloff to continue down to the 1740.25 target shown. That Hidden Pivot can be bought cautiously, with or without camouflage, but you can be more aggressive if you've been short for the ride down.  For some timely tips on how to get short, Pivoteers should review the recording of the latest tutorial session as soon as it is posted. (It should be up by no later than Thursday morning.)

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