E-Mini S&P

Bears shouldn't get their hopes too high just because the futures closed well off yesterday's peak levels. Settlement was actually toward the middle of the day's range, but not before buyers had put in a top that slightly exceeded June 20's 1619.50 'external' peak. This means they finished the day correcting a bullish impulse leg that seems likely to beget a C-D follow-through.  The action shortly after midnight (ET) looked promising for night owls, but you'll need to drill down to the 2-minute chart to find an 'external' peak subtle enough to work for camouflage.  It lies at 1612.50 and was created on July 1 at 3:28 p.m. EDT. _______ UPDATE (3:26 a.m. EDT): The set-up described above played out more or less as described (A=1610.50 at 1:54 a.m.; B=1613.00 at 2:14 a.m.), but it fell a tick shy of its 1614.50 target and would have produced a break-even trade at best. The futures subsequently dove 5 points, presumably gratuitously, providing ample reason for night owls to call it a day.  DaBoyz will have to content themselves with screwing the pooch for another six hours, when there may be a mote of 'good' (i.e., other-than-bad) news to exploit.

If bulls have been enfeebled by bearish headlines and the sharp upward skew in mortgage rates, we should see evidence of it in an easy breach of the 1567.25 midpoint support shown in the inset. Alternatively, an upward reversal from a low that gets nowhere near it would imply bears are about to get skewered for the umpteenth time.  Regardless, traders will find a comfortable handle on either scenario by paying close attention to the demeanor of impulse legs on the five-minute chart.

The 1613.25 rally target proffered here yesterday came within a point of nailing the intraday high, but that wasn't good enough because I'd advised a 1.00-point stop-loss on the short. It may be a moot point by the time you read this, since the futures were glowering with bullish menace shortly after 2 a.m., having pulled back by a mere 9.00 points intraday.  The subsequent drift higher has created a bullish impulse leg on the 5-minute chart (see inset), but there didn't seem to be enough energy in it to give night owls much lift. All things considered, will be on the sidelines at Friday's opening bell.

The futures head-butted a 1601.00 midpoint resistance three times yesterday (see inset), implying that if and when bulls exceed it they'll be on their way to exactly 1613.25, its 'D' sibling. Both a long and a short are therefore possible today, with camouflage as the method of choice.  If you'd prefer the lazy man's approach, however, you can simply short 1613.25 with a 1.00-point stop-loss. Position size should be limited to a single contract. _______ UPDATE (12:41 p.m.):  The 1.00-point stop-loss proved a tick too tight and took us out of the trade at the intraday high. One chat-room denizen evidently got a nice ride using a 1614.75 stop-loss, which, for purposes of risk management, implied taking a partial profit at 1608.75.  The gain would have been 4.50 per contract, or three times what was initially risked.

This rally is sucker-bait, but we may not get a chance to short the 1604.00 target given here yesterday, since the futures struggled without success to reach a lesser target at 1594.25 (see inset).  The target remains valid nonetheless, but it should be shorted only with 'camouflage' because it coincides with an obvious structural resistance recorded on June 21.  This gambit is for experts only, since a print at 1594.25 would create a bullish impulse leg on the chart shown.

With yesterday's breach of a clear HP support at 1559.75, the futures signaled further weakness to as low as 1518.50.  Important lows made in March/April just above that number will make it less useful for our purposes, however, since 'structural' support will likely supersede Hidden Pivots in determining a swing low. The most promising short conceivable at this point would be from near the 1604 midpoint pivot of the pattern shown. That's a 45-point rally from here, and that would surely be enough to turn 'everyone' bullish again.  We would have good reason for caution, however, since a run-up to the midpoint pivot would have 'bull trap' written all over it

It's early Monday morning and the futures have been down the equivalent of 100 Dow points so far.  Fading Sunday night selloffs is usually a winner, but I'd caution against doing so before the September contract has touched the 1559.75 correction target shown. (Note: At that point, the Dow would be off by about 220 points.)   Since that would be the culmination of a bear cycle that has taken a little more than a month to play out, we should expect a significant bounce of perhaps 2-3 days before bears could push this vehicle still lower. However, if the Hidden pivot support survives for just a short while -- say, an hour or two -- we should infer that considerable selling remains to be spent. ________ UPDATE (10:56 a.m. EDT): The futures overshot the crystal-clear target given above, meaning sellers have at least one more wave of punishment to inflict on this vehicle. My current target at 1518.50 is a c-d extension of the larger pattern shown, as follows: A=1649.00  (6/19 at 5:00 a.m. EDT); B=1577.00 (6/20 at 4:15 p.m.)

If you're a night owl looking for easy pickings, the one-minute chart looks guileless at the moment (11:22 p.m.). The staircase of external peaks along the downtrend shown should provide you with a secure foothold, the moreso if you use the green line at 1642.75 (aka 'D') as a place to start looking.  However, any chart above the level of the three-minute will probably yield an appealing-looking short. On balance, because the market seems unable to resist the siren call of Helicopter Ben, the best play from here is probably to fade sellers.  Keep in mind that we are still targeted on a minimum 1659.50 for this minor rally cycle.

There were some nasty cross currents at work on Monday -- tradable, as will nearly always be the case for camouflageurs, but not easily so. The pattern shown could prove useful to night owls, or perhaps to day traders if it has not panned out by the opening bell on Tuesday.  The 1659.50 target is validated by price action Monday morning very near, if not precisely at, the p midpoint. Notice that there were two distinctive peaks created during the first half of the session.  They lie, respectively, at 1641.00 and 150 minutes later, at  1639.50.  Any b-c pullback that begins from somewhere in-between would be a bonanza for camouflageurs looking to get long. If it happens almost too quickly to catch that would be a plus, since there would be relatively few competitors aboard.  You should plan accordingly by being on instant-alert.