E-Mini S&P

Tuesday's rally demonstrated how it's possible to be quite confident about where a stock is headed without necessarily being able to capitalize on it.  In the chat room, a hawk-eyed Pivoteer identified an 1846.75 target on the weekly chart. At the time, the futures were in the throes of a five-day stall at an 1840.00 target we'd used earlier.   Targets don't get much prettier than the one at 1846.75 (see inset), and so I noted in the chat room that this 'very compelling' price objective 'begged to be shorted'.  However, I warned that the Hidden Pivot might prove to be un-tradable, since, "If Mr. Market [was] his usual diabolical, sonofabitch self, the futures [would] end the day within 1.00 point of the target." As indeed they did.  In the final hour of the session, the March contract shot up to a high at 1846.50 that lay just a single tick shy of our target. The next 30 minutes produced no further gains, and the futures eventually settled at 1846.25, a half-point from the target. This would have made for a great short if it had occurred around mid-session.  But on the closing bell? No way. [Breaking news: In the chat room this morning, with the Dow down nearly 100 points, the aforementioned hawk-eyed Pivoteer reported having gotten short minutes before Tuesday's close using call spreads in SDS, an ETF proxy for 'ultrashort' S&P 500 positions.] So what now? I expect this vehicle to continue higher in the weeks ahead.  However, if the rally were to launch in the first hour or two of Thursday's session, that would be warning bears either to step aside or to go with the flow, since the Hidden Pivot at 1846.75 is not exactly chopped liver. In fact, the target has been more than

Permabears hoping that the opening days of 2014 will deliver a long overdue reality check to the markets had better study the chart accompanying this tout.  If anything, the year appears likely to begin with a bang rather than a bust. Notice how all of the price action during the last several days has occurred above a Hidden Pivot resistance at 1830.00. The rally target was so clear and compelling that we might have expected a pause of at least 3-5 days before stocks went any higher. Instead, the futures pushed through the resistance effortlessly, suggesting that bulls are consolidating for yet another leg up. One caveat applies, however: The daily chart shows Hidden Pivot rally targets at 1856.75 and 1893.75 that have been more than a year in coming (for those interested, A=1382.25 on 12/28/12; or alternatively, A=1340.25 on 11/26/12; and B=1685.75 on 5/22/13). Either number should be expected to show enough stopping power to be shortable (with a very tight stop-loss), and that's what I am going to suggest.  However, if the lower number gives way easily, bet on more upside to the higher, at least. If it too proves to be a pushover, bears had better run for cover. _______ UPDATE (11:09 p.m. EST): In the chat-room just now, an alert Pivoteer identified a very compelling target on the weekly chart at 1846.75.  The futures are not likely to exceed it, at least not today, since the target is clear, clean and unmistakable. But it will not necessarily make for an ideal short, since, Mr. Market being his diabolical, sonofabitch self, the futures are liable to be hovering within a point of it when 2013's final bell rings. _______ UPDATE (After the bell): Actually, the futures were hovering just a half-point from our target when the bell

The futures topped Friday a point from the rally target we'd been using for a week. As noted in an update after-the-fact, getting short and staying short would have been difficult, although it would have been theoretically possible to come away with a profit of perhaps $200 per contract.  The target was a clear one -- clear enough, I should think, to give the rally a day or two's pause.  However, and as I mentioned here on Friday, none of the abc corrections that played out on the very lesser charts reached their 'd' targets.  Instead, they turned from near their respective midpoint pivots, suggesting there are more buyers waiting in the wings.  Accordingly, night owls should trade with a bullish bias Sunday night, although I am hard-press to offer you a target that inspires bold confidence.  The 5-minute chart can be used, whether if bottom-fishing or looking for a promising camouflage set-up.  As of this moment, I'm looking for a tradable bounce from within a tick of the 1834.25 target shown.

The rally to 1841.00 that I promised you still looks like a lock-up to me, although the ascent has been too brutally slow and sloppy for a buy-and-hold play.  And now, unfortunately, a move to the target may not make for a very good short either if it occurs with an hour left in a Friday session. I'll leave it up to you, but I wouldn't recommend taking a short position home over the weekend unless it is at least 6 to 8 points in-the-black by the final bell.  For night owls looking to pass the time with a little camouflage trading, the five-minute chart (see inset) may be as low as you'll have to go.  _______ UPDATE: The day was filled to overflowing with non-surprises. The futures topped at exactly 1840.00 in the early going, then sold off by 6 points before turning flaccid for the remainder of the session. In retrospect, confidently 'knowing' in advance where the futures would peak was not good enough, since it still would have required quite a bit of work for a trader to have extracted a living wage from the tedious ups and downs that characterized the day that followed.  Be prepared for more of the same next week, since any week in which New Year's Day falls on a Wednesday is a lost cause for anyone foolish enough to try to conduct business.  Look for the futures to trend higher on Monday, since there were no corrective abc patterns on Friday that reached their 'd' targets.

If sure things exist in the world of technical forecasting, then the impending rally to exactly 1841.00 is one of them.  In the accompanying chart, notice how the 1818.00 midpoint Hidden Pivot has been literally pivotal to the futures ups and downs this week. First, on Sunday evening's opening bar, the gap up through it all but guaranteed that the rally will continue to at least 1841.00. And then yesterday, the session's deepest pullback, which occurred on the opening bar, bottomed at 1818.25, a single tick from the pivot.  The futures obviously 'know' that Hidden Pivot constraints are there, and it remains only for March contract to rally to the 1841.00 'D' target of the pattern to complete the minor bull cycle begin last Wednesday. Trading this precise, ostensibly useful, intelligence is another matter, since bulls are taking their sweet old time getting to the target.  Yesterday's tedious fluctuations were essentially untradable.  However, traders should be prepared for an out-of-the-blue surge, which could occur outside of regular hours or perhaps via a short-squeeze at the opening bell. In any case, I'd suggest using the 2-minute chart or lower to find the minor ABC pattern that can get you aboard with relatively little risk. Shorting 1841.00, on the other hand, can be done straightforwardly by offering a single contract at 1840.75, stop 1842.25.  If you want to increase the size of the position, then camouflage is the way to go -- especially since it's possible that a target I've drum-rolled as I have this one will get front-run.

Subscribers who used the 1818.00 target I'd proffered in the chat room Friday to get short could have covered the position less than an hour later for as little as 1812.50. (One subscriber who played it strictly-by-the-numbers reported shorting 34 contracts at 1816.25 and covering them all at 1814.50. The gain would have worked out to about $2975.)  Near the end of the session, I further advised keeping 25% of the original position to swing for the fences. But that, too, should have been covered, since the futures traded up to 1820.00 on Sunday night's opening bar. And now what? Since the 1818.00 target, a Hidden Pivot, is tied to a more important one at 1841.00, that's where we should assume the March contract is headed today.  I would rate a rally to that number a very good bet, but because the futures are in record territory and virtually everyone is bullish, the path they are likely to trace out on their way to the target is apt to be tortuous and devious. Night owls can try to catch a ride on a pullback to the 1818.00 red line nevertheless. As always, 'camouflage' will be the entry method of choice. However, if you're game to try another tactic, the implied 21 points of profit (on a ride from from 1818.00 to 1841.00) gives you 7 points of stop-loss to work with if you use a buy-stop entry or a straight bid at 1818.00. If you're successful on the long side of this play, you should reverse the position at 1840.50 and go short with an 1842.25 stop-loss.  If you hold no position if and when 1841.00 is closely approached, try shorting a single contract at 1840.50, stop 1841.50.

The lunatics and thieves who stoked yesterday's Tapeworm-induced short-squeeze are aiming for at least 1830.25, a Hidden Pivot target which if achieved would imply at least 200 more points of upside for the Dow over the near term. The so-far intraday high at  1806.75 refreshed the bullish energy of the hourly chart by exceeding all previous highs, but the futures will probably still need to pull back to at least 1797.25 to get a running start on the next leg up.  If you're keen on catching a ride higher, I'd suggest waiting for a second point 'C' low to form before acting. I've sketched this out hypothetically for your further guidance. ________ UPDATE (9:30 p.m. EST): In after-hours trading the futures have gotten within a single tick of tripping a buy signal at 1806.50 (see inset, a new chart). It would be the first such signal, however, rather than the second, which is the one I'd recommended jumping on. Accordingly, you should wait for the pattern to develop as I've sketched it before looking for an entry opportunity on charts of lesser degree. Assuming you're a night owl, you could also attempt it on the signal that appears to be imminent, using the point 'A' low noted. This is suggested if you're worried that the trade will get away from you if you wait for a second point C to form. ______ UPDATE (December 20 at 2:29 p.m. EST): In the chat room, I've drum-rolled an 1841.00 target, subject to midpoint resistance at 1818.00. As of this moment, the intraday high is 1817.75. I've flagged this number as very shortable and suggested doing so via camouflage on the one-minute chart.  As of this instant (2:29:13), an impulsive downtrending abc would be signaled by an 1816.50 print. _______ UPDATE (3:34 p.m.):

Yesterday's low occurred a single tick beneath a Hidden Pivot support at 1770.50 (see inset) that evidently worked to get a chat-room denizen aboard in timely fashion. A tightly stopped buy at that number would have caught the best trade of the day -- the only easy trade, perhaps, given that the futures spent the remainder of the session screwing the pooch after rallying nine points from the bottom. If this is the Santa rally, we shudder to imagine what January's going to be like.

The futures failed to get airborne after embarking on phase 2 of yesterday's short-squeeze, but the impulse leg itself was still intact and presumably waiting to be 'actualized' when the day ended. If this happens it will probably be over before it begins, perhaps by way of a short-squeeze that leaves traders choking on dust at the opening bell. However, night owls might be able to catch a ride with a 'camouflage' entry. The most useful 'external' peak available for this purpose is the one at 1780.50 high that I've labeled.  Any b-c pullback from just above it (i.e., 2-3 ticks) would be just the ticket.