E-Mini S&P

Yesterday's stop-loss on a bottom-fishing recommendation missed nailing the intraday low by a single tick. The three-tick stop I'd recommended was quite tight, to be sure -- but not too tight, considering how pretty the pattern that produced the target was.  A couple of chat-room denizens who had judiciously left a little more room reported catching a ride anyway -- and it could have been a good one, since the subsequent rally was an 11-pointer. A relapse has brought the futures down to within inches of the day's low, which itself created such a nasty looking impulse leg that I'm inclined to think it's a bluff.  I wasn't looking for the stock market to Santa-up until next week, but perhaps yesterday's fright-mask performance wig augurs an upturn sooner than that. _______ UPDATE (December 13, 12:01 a.m.): I hadn't noticed this earlier, but the futures have generated the first bearish impulse leg we've seen on the daily chart in a long while. This argues for caution, at least until a second down-leg (aka C-D) tells us, via price action near the Hidden Pivot midpoint, how serious the threat is.

Wednesday's dreadful performance produced only a couple of rally attempts, both of them feeble, but I wouldn't expect much from this vehicle until it hits the 1772.50 target shown.  Night owls should look to get short via camouflage, using oscillations around the midpoint pivot as your focus. Bottom-fishing at the target will probably be easier, if that's what you prefer, and you can do so via a 1772.50 bid, stop 1771.75, for a single contract. _______ UPDATE: The low was 1771.75, but at least one chat-roomer managed to hang on with a stop-loss at 1771.50.  While it is natural to assume that DaBoyz 'run stops' above and below key supports and resistances, it is another matter when they hit stops slightly above or below Hidden Pivots, since since we are the only ones who know about these swing points.  My judgment is that institutional traders are tuned to my numbers and perhaps even present in the chat room. Henceforth, I will try to be more guarded in presenting them.

With virtually everyone apparently eager for the Santa rally to commence, the stock market has only grown increasingly constipated and agitated. I expected this condition to make it difficult for the E-Mini futures to achieve even the modest target at 1814.25 proffered here yesterday.  What surprised was that when the rally failed to materialize, the ensuing selloff was not even strong enough to achieve an equally modest downside target at 1799.00.  Under the circumstances, only the nimblest traders should be mixing it up with the E-Mini crowd right now.

We were using an 1814.00 rally target yesterday, but I lacked the imagination to foresee that this glue-horse would fail to muster the implied four points of upside. Now, another Hidden Pivot has popped up that looks even more compelling.  It lies at 1814.25, and because the original target remains viable as well, the implication is that there will be double stopping power thereabouts. Accordingly, I'll recommend shorting a single contract at 1814.25, stop 1815.25. There should be no illusions about catching a major top here -- this is just a trade, is all. But the target looks to me like the sort that cannot fail. Scalpers will be on their own if the order fills and gives way to a pullback of at least 3.00 points. Please note that this gambit could trigger overnight, denying regular session traders an opportunity to lay 'em out. ________ UPDATE (8:05 a.m. EST):  An ostensibly modest rally target continues to remain out of reach, notwithstanding our eagerness to get short there. We should conclude the obvious: That for the time being, nothing but weakness lies underneath. Absent the conditions needed to trigger a short squeeze, DaBoyz will have to take the futures lower before they can run them higher.  I continue to think that the rally will come, but no earlier than the middle of next week, when December out-of-the-money calls have been thoroughly killed. In any case, the short from 1814.25 is kaput.

As has occurred with increasing frequency in recent months, the markets have opened Sunday evening with a timidity that belies their underlying, rabid demeanor. All DaBoyz need to trigger the short squeeze that would officially kick off this season's 'Santa rally' -- I hate that phrase -- is some mote of news that could be construed as remotely bullish for stocks. (Said news evidently won't be coming from Wal-Mart or other retailers that target the down-and-out, however.) My guess is that the futures will reach the 1814.00 target (see inset) overnight. That wouldn't leave much for night owls to trade, but the target can be shorted nonetheless using camouflage. Please note that even a small overshoot of perhaps 1.00 point or more would be warning bears to get out of the way ahead of the opening bell.

What a hot, nasty mess!  Even so, the futures have moved with precise predictability lately relative to our Hidden Pivot targets. That makes the one at 1775.00 enticing as a place to try tightly-stopped bottom-fishing. I won't stipulate that you use camouflage for this gambit, since price movement has been so obliging of our methods lately.  However, if you're inclined to work the order, use a 1775.25 bid for a single contract, stop 1774.50. _______ UPDATE (11:23 a.m.): DaBoyz caught a whiff of the latest, phony unemployment data an hour before the opening, sending this vehicle into a short-squeeze spasm that was over minutes after it began. This will leave regular-session traders with little to do but gaze at their navels all day long as the futures consolidate the move, presumably for another short-squeeze to kick off 'Santa week' on Monday.  We did nothing, since the overnight low got nowhere near the 1775 correction target.

Trading the E-Mini S&Ps used to be as easy as shooting fish in a barrel, but no longer. In fact, the futures have gotten so cunning when they reverse direction that I'd all but given up on using camouflage tactics to corral them. It's not that the turns haven't been occurring precisely where they are supposed to -- just that they haven't been doing so with the kind of subtle abc patterns that yield easy 'camouflage' trading opportunities. My hunch is that this behavioral change is the result of machine trading's growing dominance. From our standpoint, the way around this problem turns out to have been so obvious that I failed to see it until recently. Very simply, we should go back to trading the E-Minis the old-fashioned way -- i.e. without camouflage. This means putting up a bid against the minor trend, which can be scary. But we can mitigate the fear factor by being especially choosy about the kinds of patterns we trade. The one shown in the inset is a case in point. It is what I like to call 'beautiful-ugly', meaning that although it is not very abc-like visually -- it's pretty gnarly, actually -- it meets our abc criteria perfectly, with a point 'B' low that has surpassed out two distinctive 'external' lows. Those who were in the chat room yesterday got a taste of the near-certitude that such price patterns can inspire.  With the futures trading around 1790.00, I stated that the E-Mini was bound for a tradable low at exactly 1785.75.  (A Tradestation quirk caused me to err by two ticks, but several chat-roomers got the 1786.25 Hidden Pivot target precisely right.)  An hour later, with the futures still noodling around a few points north of the target, I posted the following: "[The

The chat room has been deader than Kelso's nuts lately, but that doesn't mean it has been bereft of trading opportunities. Yesterday, for instance, for any subscriber who was awake at his console, I put out a trade in the final minutes of the session that could have been worth as much as $225 per contract on $25 of theoretical risk.  The trade was a winner for anyone who followed this simple instruction (lifted verbatim from a post at 3:52 p.m. EST):  "Easy-way...is to bid 1797.25 for a single contract, stop 1796.75. You'll be on your own thereafter." As it happened, the futures bottomed moments later at exactly 1797.00, a tick below my target, and never looked back.  Four hours later, they were at 1800.50, just off a so-far recovery high of 1801.50 (see inset). Usually, when a trade requires that we catch the proverbial falling piano, I advise initiating it using the 'camouflage' technique in order to reduce risk to a bare minimum. Sometimes, though, when a price pattern is a perfectly ugly beauty like this one, I'll recommend getting aboard with a straight bid and an absurdly tight stop-loss. In this case, the stop-loss I advised lay at 1796.75, two ticks below our bid. In the actual event, the low was 1797.00, and it gave way to a bounce, still in progress as of this writing, that was good for a ride of as much as 4.50 points. Since we habitually keep risk:reward in a 1:3 ratio at all times, the two ticks theoretical that we risked at the outset implied that we could have taken a partial profit (or implemented a trailing stop on a one-contract position) once we'd racked up a gain of at least six ticks (1.50 points). _______ UPDATE (9:08 a.m. EST): The futures

A week of asphyxiating tedium has taken the fun out of this vehicle, at least for the time being. However, night owls can still try bottom-fishing a single contract at the 1803.25 midpoint pivot shown, stop 1802.50. If the stop is hit you could try again near the 1798.75 'd' target, but camouflage may be needed to avoid getting shut out by a premature upturn.