E-Mini S&P

The 1819.50 target shown can be used as a minimum upside objective for the near-term. Getting long via camouflage will be tricky, however, since the futures are trading in record territory. This means there are no true 'external' peaks that we can use for handholds.  The target itself is shortable, however, with a pattern delicate enough to suggest you may be able to get away with a three-tick stop-loss. If you initiate the position via a straight offer (rather than via camouflage), limit size to a single contract.

I'd forecast a squall ahead if the futures took out a midpoint support at 1773.75, but they went no lower than 1275.75 overnight, once again denying bears a little respite.  This vehicle used to be an easy trade using camouflage, but no longer. In fact, it's become such a nasty, machine-traded little s.o.b. that even applying hindsight in places where we might have expected a price reversal, it's extremely difficult to find a 'camo' entry opportunity (see inset). I'm not going to drop coverage of the E-Mini, but because it has yielded so very few decent trading opportunities lately, I'll feature it less often.

The strong bullish impulse leg that greeted the day turned out to be a rather nasty bull trap.  Because the impulse leg looked so promising, and because the subsequent reversal generated a bearish leg on the hourly chart, the yellow warning flag is out. My outlook had been bullish for the both near- and intermediate-term, but no longer. DaBoyz had an excellent opportunity to distribute stock when short-covering drove stocks toward the previous day's highs on the opening bell. However, rather than exploit the squeeze for a while, they pulled their bids and let the futures fall. The result was the bearish impulse leg shown (see inset). It targets 1765.75, predicated on a breach of the 1773.75 midpoint support. Scalp from the short side, but note that either number can be bottom-fished with a stop-loss as tight as three ticks. If you use a straight bid rather than camouflage, limit position size to a single contract.

Yesterday's price action was puzzling, although that doesn't necessarily make it worthy of serious reflection. Usually I get a hit off red/green patterns displayed by my Tradestation 'radar' screen. But amidst Monday's flatulence, my home-grown indicator was all over the place. The usual bunch of high-fliers got whomped for most of the session, eventually dragging the broad averages down with them. Someone in the chat room said that a statement made by Icahn tanked the market late in the day, but I seriously doubt that the stock market much cared what he had to say. My guess is that it was all about rotating money from dot-com stocks into the Dow. Even buzzards grow tired of eating the same offal every day. In any event, the 1816.75 rally target proffered here yesterday is still in play, and your best ride for catching a ride to it may lie in bottom-fishing the 1784.00 p midpoint or, using camouflage (because it coincides with a key low), the 1777.25 d target of the pattern (see inset). The pattern's crisp, single-bar coordinates suggest that you may be able to dispense with camouflage at p if trading only a single contract, and that a stop-loss as tight as three ticks would suffice. Note that an alternative ABC pattern that I've highlighted targets 1808.25, with a p sibling at 1792.75. The pattern is so clear and compelling that I would surmise that the S&Ps are in at least minor trouble if it is not reached straightaway. But the futures would likely have to close above the 1792.75 midpoint resistance to be ready to frolic on Wednesday. On re-reading the above, it is so convoluted that I'm going to suggest that you simply study the chart and draw your own conclusions, trading them as you see fit.

Today's touts include a very bullish target for the S&P 500 Index. However, the futures show more immediate resistance at the 1816.75 target shown. Nimble traders can try shorting there with a tight stop on Monday, but because the A-B impulse leg is somewhat gnarly, camouflage is suggested. If there's an opportunity to get long for the ride up, you can use any profits thereof to cushion the stop on the short reversal.

After topping not far above a major target at 1767.00 that we'd been using, the futures have made zero headway over the last two weeks. However, the thing to notice is that they have not given up any ground either.  If the consolidation this implies gives way to a renewed surge, we should use the 1816.75 target shown as a minimum upside objective. If there's an intervening pullback to the 1728.50 midpoint pivot shown, you should view that as an opportunity to board belatedly ahead of the presumptive Next Big Push.

The December contract has blown through a promising rally target at 1739.25 with the greatest of ease, implying it's got eyes for the 1819.50 target shown.  Traders should hold a bullish bias, since there is a theoretical 55 points of upside potential to capture. Getting aboard a rally as mature as this one will always be tricky, but your goal should be to rack up as many points of profit as possible in order to cushion the stop-loss when we attempt to short 1819.50. It would not diminish the bullishness of this chart one iota if the futures were to return to the 1729.75 midpoint pivot, Indeed, that should be viewed as an excellent buying opportunity ahead of a potential last-gasp rally.  _______  UPDATE (10:34 a.m. EST): In the analysis above, I inadvertently overlooked a 1769.50 target, but it is why the futures have stalled here; and why, furthermore, this could prove to be an important top.  The Hidden Pivot was actually exceeded by 5 points at last week's record highs, and although that's enough to tip the odds slightly in favor of yet another leg up (to 1819), considering the long-term, big-picture context of the weekly chart shown, a 5-point overshoot is not quite enough to make the 1819 target a 'done deal'.

In the chat room yesterday, at around 2:10 p.m., I advised a 'mechanical' short in this vehicle if it rallied several points to the 1750.25 midpoint pivot (red line) shown. The trade worked beautifully and was still in play as of this writing. It was 'mechanical' in the sense that a risk:reward ratio of 1:3 was held constant over the life of the trade, from entry to exit. It proceeded from the idea that if a trading vehicle is going to muster one last-gasp rally before heading lower, the most logical place for the rally to end is at a midpoint pivot that has already been violated. Thus, we determined to get short if the futures pushed back up to 1750.25, which, as you can see, they did. But instead of using 'camouflage' to initiate the trade, which can be tricky, we simply shorted at the red line in anticipation of a drop to the D target shown, 1739.25.  With 11 points, or $550, of profit potential per contract, we could afford to risk a third of that on our initial stop-loss.  We do this routinely, always keeping the 1:3 ratio noted above in mind. In this case, it implied shorting 1750.25 with a 'mechanical' stop at 1753.75. This may not be the least risky way to enter a trade, but it is most surely one of the easiest. What next? The 1739.25 Hidden Pivot target still looks like a winner -- good enough for me to suggest reversing the short position and bottom-fishing there with a stop-loss as tight as 2-3 ticks.

The futures appear bound for the 1780.25 rally target shown, so your trading bias should be bullish for now. Night owls can zoom down to the three-minute chart to find camouflage opportunities, one of which is manifest at the moment in the form of a 1764.00 'external' peak recorded at 6:12 p.m. EST. Although there is implied upside potential of 17 points over the near term, price action on Wednesday was probably too turgid to fuel any aggressive moves by DaBoyz overnight. Under the circumstances, your best bet may be to try to rack up five or six points of profit overnight so that you're cushioned against any moderate craziness that occurs at the opening bell before liftoff