E-Mini S&P

It's usually easy to predict where the futures are headed next, at least over the short-term, but leveraging this knowledge can be diabolically difficult. Two traders comparing notes in the chat room yesterday afternoon picked their spot to get short, but all they got for their trouble was aggravation when the futures took a tortuous path lower rather than the path of least resistance. Now, early Wednesday morning, we see quite clearly that the futures will fall to 1683.25 if they take out a midpoint support at 1689.00 with which traders have been playing toe-sies for more than an hour.  The camo short from that number should work nicely for night owls, since the futures seem to deliver most reliably at hours of the day when there are relatively few traders around to take advantage.  Even then, the diligent night owl might go bleary-eyed trying to reap the maximum gain here. If it helps inspire you, 'the max' works out to around $300 per contract -- a good night's work, even if it means having to fight off asphyxiating boredom. ________ UPDATE (10:12 a.m. EDT): It only took ten hours, but the futures have finally fallen to our target this morning, yielding a profit of about $400 per contract if you were able to get short as advised.  The actual low so far has been 1281.75, a small overshoot of our number that has bearish implications going forward.

As I've noted in 'Today's Action', merely knowing where the S&Ps are likely to top does not necessarily make it easy to short the little sonofabitch.  The futures have spent the last few days playing cat-and-mouse with our 1708.75 target without actually touching it.  Equally frustrating is that pullbacks have been shallow, suggesting we are seeing a consolidation rather than a distribution.  Even so, I'll suggest sticking with the camouflage shorting strategy if you have the patience. Your odds will be best if you initiate the trade within a few ticks of the target rather than several points below it. And while you're waiting, consider taking a small shot from the long side, since any profits you make on a rally toward 1708.75 could be used to cushion a wider stop-loss for the eventual short.  An example of a set-up that traders could bottom-fish without camouflage and using a stop-loss as tight as two ticks (!) is shown in the accompanying chart. _______ UPDATE (11:21 a.m. EDT):  The futures have tanked this morning after having gone no higher than 1703.50.  We were well prepared for this drop, so it's possible some of you may have gotten short. If so, please let me know in the chat room and I'll establish a tracking position for your further guidance. For now, though, you should cover half the position and let the rest ride with a very generous stop-loss based, perhaps, on an impulsive rally on the 5-minute chart.  At the moment, that would imply an uncorrected pop to 1695.75.

No change.  Camouflageurs should look for entry opportunities at or near the 1708.75 rally target shown in the chart. In practice, this will entail leveraging the first downtrending abc that meets our criteria once the target has been touched or very closely (i.e., within 3-4 ticks) approached. I'd suggest using the 1-minute chart or less to find your spot.

Chat room discussion suggests that some subscribers have been hard at work trying to short DIA by buying the Sep 140-135 put spread for 0.10-0.12.  A corresponding rally target in this vehicle looks shortable as well, although there will be special risks in attempting it on a Friday.  My suggestion is to initiate the trade with four contracts, using camouflage. Traders will probably need to zoom down to the 3-minute chart or less to find a perfect set-up, assuming one occurs. If the pullback that we expect from 1708.75 does indeed occur, be sure to cover at least two contracts before the bell. Although I doubt that Sunday evening's opening will impale shorts on a spike, it's a risk nonetheless, and we should therefore hold position size down to just one or two contracts.

Even though I've treated the stock market's ability to remain aloft as disappointing Q2 earnings rolled in as a sign of underlying strength, we shouldn't ignore the fact that the S&Ps have begun to roll over from within inches of a major Hidden Pivot target at 1708.75 (see inset). We'll continue to look for shorting opportunities in real time, so stay closely tuned to the chat room if you're interested. Click here to learn how you can reduce entry risk by using the 'camouflage' trading technique.

Bulls won by decision yesterday, recouping losses and then some after getting hammered beneath a midpoint support in pre-dawn trading. Once again, the gains occurred against a backdrop of lousy Q2 earnings, making buyers' performance seem more impressive than the relatively modest point tallies they were able to rack up. After the bell, this vehicle appeared headed precisely to the 1690.25 rally target shown in the chart. Since that implies just 4 points of upside, however, the more attractive trade could be a short from the target. To keep it simple, I'll recommend a non-camouflage entry -- i.e., just a straight offer of a single contract at 1690.25, stop 1691.25.  You'll be on your own if the order fills, but keep in mind that the initial 1.00 point of theoretical risk will require you to shoot for a profit of at least 3.00 points ($150) on the exit. _______ UPDATE (9:54 a.m. EDT): Last night's feeble rally stranded our short offer when it topped at 1689.00, just shy of the target. The E-Mini's failure to achieve a relatively modest objective suggests it is unlikely to rally by much today -- but neither is it likely to plummet, since the opening thus far has been too boring for words.

Wednesday's moderate selloff was bearishly impulsive on the hourly chart, but it didn't negate the 1703.75 rally target shown in the chart. Night owls should look for a bottom-fishing opportunity at the 'p' midpoint support of the small corrective a-b-c at the right-hand edge of the chart. Camouflageurs looking to buy-stop their way aboard will need to zoom down to the 3-minute chart or lower to find the 'external' peaks needed to do this with ease.

Bears could be in for a respite shortly, since there's a major Hidden Pivot resistance not far above, at 1708.75.  Another at 1703.75 that was noted here previously remains viable, but we should defer for the time being to the higher number, since it is by far the more important.  Camouflageurs can try shorting at either, or both, but  I'd suggest doing so at 1703.75 only if the theoretical entry risk per contract can be held to no more than five ticks (1.25 points). _______ UPDATE (4:54 p.m.): Tuesday's pullback was mildly impulsive and pointed toward a 'D' correction target at 1683.25 that can be bottom-fished in any way that suits your style. Night owls should consider shorting the implied fall, since the p midpoint support at 1687.50 has been exceeded by 1.00 point. The pattern is shown at the right-hand edge of the chart (a new one), along with our original rally target at 1703.75. _______ UPDATE (July 24, 1:34 p.m. EDT): A moderately bearish impulse leg has been generated on the hourly chart today, but it would become more serious with just a little more selling. Specifically, the short-term outlook would take a turn for the worse on a print at 1676.75. So far, the intraday low is 1678.25.

With business headlines in a Q2 earnings wallow, the bullish trajectory of stocks has barely slowed. Notice in the accompanying chart that after stalling at the midpoint resistance for a mere day, the S&Ps have crashed through it and now appear headed with irresistible force toward its 'D' sibling at 1703.75. That implies a mere 120-point Dow rally, but my hunch is that the target will not put up much of a fight. Sunday night owls may be the only traders able to catch a ride, since it could well be over -- at least temporarily -- on whatever gap-up opening DaBoyz are able to engineer Monday morning. _______ UPDATE (July 22, 5:23 p.m. EDT): The futures spent the day screwing the pooch, which is about as bad as it ever gets these days for the broad averages when the news is bad or worse.  The 1703.75 target noted above remains viable nonetheless, and the E-Mini therefore remains bullish from a trading perspective. Camouflageurs should look for opportunities on the 5-minte chart or lower.