E-Mini S&P

Today's chart takes a couple of steps back to show what became enticingly obvious with Wednesday's impulsive thrust. A 40-point rally lies ahead, as well as a promising short from the 1708.75 target.  Camouflageurs will need to be at their nimblest to get long, however, since the only 'external' peak remaining that can be leveraged is the one at 1666.75 recorded back in May. It has been exceeded in after-hours trading early Thursday morning, so it's possible that only night owls will get a crack at it. _______ UPDATE (July 14, 11:32 p.m.): Waft, waft, waft. The futures were trading above Friday's highs in very un-timid action Sunday night.  Although the gains were relatively modest as of shortly before midnight, it is brazen of DaBoyz to venture into uncharted waters ten hours before the opening bell. Camouflage entry opportunities will be difficult to find under the circumstances, but the 1677.00 target of a minor pattern (5-min, A=1667.00 at 1:10 p.m. on 7/12) might be helpful to night owls.

The futures are streaking toward the 1645.25 target implied here yesterday, but there will be opportunity in this only for camouflageurs prepared to leverage the 'external' peaks labeled in the chart.  As always, a quick, subtle B-C pullback from a tick or two above any of them will be the ticket for a long entry. You'll need to be quick, however, since the breakout is universally expected -- and hardly unlikely. _______ UPDATE (9:49 a.m. EDT): This morning's opening high at 1646.75 somewhat exceeded my target, but without surpassing any of the 'externals' noted in the chart (the first of which lay at 1647.50).  Under the circumstances, camouflageurs should move to the sidelines until there's a print slightly exceeding 1647.50, then a B-C pullback.______ UPDATE (9:54 p.m. EDT): Bulls managed to weasel their way to an impulsive peak that was precisely where we'd wanted it to be, but they were too tired to overcome the weight of the bull trap that DaBoyz had sprung on the opening bar. Even so, bears were on the ropes once again at the close, and it therefore won't take much to short-squeeze this gas-bag past mid June's highs come Wednesday morning. Night owls  shouldn't have much trouble staking out a low-risk long position, since Tuesday's choppy action created numerous 'external' peaks on the lesser charts that can be used opportunistically for camouflage.

The ostensibly bearish pattern shown never even got close to the midpoint support during recent sessions, implying that bulls will be ready to romp as the new week begins.  The uptrending ABC pattern at the right-hand side of the chart has already triggered a buy signal, but the pattern has little value predictively because its 'D' target coincides with mid-June's highs. Camouflageurs may be able to leverage a 1635.50 peak made June 19 on the way down, but it'll require zooming in on a sub-hourly chart to make the peak display properly.

Given the constipated action of the last two days, we shouldn't expect much during the rest of this holiday-shortened week.  The 240-minute chart shown remains bullishly impulsive nonetheless, and I therefore would not recommend attempting to impede the flow too aggressively. Although the futures were flatlining Tuesday evening, night owls undaunted by tedium may be able to leverage the external peak at 1609.75 that is discernible on the 3-minute chart (2:00 p.m. EDT).

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.