E-Mini S&P

I prefer to show you winning trades, but there's a lesson in pondering this would-be loser.  An ambitious rally target at 1494.50 remains valid, as you'll already know, but  it would appear there is at least another half-day or so of selling to be reckoned with before bulls recover their  mojo. This is what I've inferred from the failure of the very fetching bullish 'camouflage' set-up shown in the chart to pan out.  I'd have buy-stopped myself in at the 'x' entry trigger, only to have been disappointed when the futures failed to better the entry price by more than a single tick before relapsing to new lows.  When a trading vehicle becomes this cagey, we need to become almost too cautious to trade.

The ambitious 1494.50 rally target shown looks like a lock-up, given the gap through its p midpoint sibling at 1438.50 on Wednesday. Since all price action that has occurred since is presumptive consolidation, we should look for our camouflage entry opportunity at the midpoint support -- or possibly the D target -- of any lesser corrective patterns that occurs today or Monday. I'd suggest focusing on the three-minute chart, which at this moment is developing an abcd pattern with a 1450.25 midpoint and a D target at 1445.50 (a=1460.50 on Jan 3 at 1:54 p.m. EST; b=1450.00 on Jan 3 at 3:39 p.m.) ______ UPDATE (January 7 at 12:41 a.m. EST): Late Sunday night, the futures were entering their fourth day of a tedious consolidation.  Our trading bias is bullish, and I would suggest using the 15-minute chart to find an impulsive rally worth buying.  Camouflageurs can drop down to the three-minute chart in search of a smaller pattern with an 'x' entry trigger, but make sure that the larger pattern (i.e., on the '15') meets the single-bar rule.

Since today's guest commentary concerns the seemingly absurd prospect of a Dow rally to 20,000, I thought it might be a good time for me to at least pretend such a thing is possible. As it of course is.  Technically speaking it's simply a matter of looking at the E-Mini S&P's chart the way I'd look at Gold's -- which is to say, with as a bullish bias that I can justify based on hard evidence.  There are two things to notice in that regard. First, the rally from purple A to B is genuinely impulsive, having exceeded an important external high at 1459.75 recorded in December 2007 (albeit by just 2.00 points). Second, the 1461.75 high recorded in mid-September exceeded a clear 'D' target at 1422.25 (green line) by a whopping 39.50 points. Moreover, a significant portion of the price action since then has occurred above the D target, suggesting it's a consolidation. Even for someone who expects the economy to tank in 2013, as I do, there is no evading the bullish implications of the facts cited above.  Most immediately, the logic of it suggests we'll see new all-time highs near 1553.50 in the weeks ahead. That would represent a rally of about 7% from these levels. Notice that the 1443.75 midpoint resistance (purple p) of that pattern has already been decisively breached by about 14 points. Much as I'd like to say we can go back to being bearish now that we've at least considered the bullish case, we are in fact obliged by the evidence to be bullish.  If there's any hope I can hold out to permabears, it is that a high at 1553.50 -- representing a headline breakout, by 34 points, above the 2007 top -- could in theory set up one of the

A downside target at 1378.50 (see inset) will likely put a floor beneath any gyrations that attend inconclusive news from Capitol Hill. The 'p' midpoint associated with that number lies at 1403.50, and so a rally to that number would provide a logical opportunity to get short via camouflage. Notice as well that if the 1378.50 pivot is breached, an alternative target at 1373.75 would be in play. _______ UPDATE (10:35 a.m. EST): The futures have rallied to within two ticks of the 1413.50, but without yet producing an abc downtrend that could be shorted using camouflage.  If you initiated the short anyway with a 3-tick stop from 1403.50, continue to use 1404.25 as a stop-loss.  This morning's strength is absolutely inscrutable, at least to me, since there does not appear to be much movement toward a fiscal cliff deal with the clock about to run out.

I disseminated a 1378.50 downside target yesterday when the futures crushed the 1403.50 midpoint support of the pattern shown. It's yours to leverage as you please (see inset), but we shouldn't get too immersed in such relative trifles, since fiscal-cliff mania could be rampant at any moment of the day.  Such hysterics would of course be constrained, if not to say governed by, Hidden Pivot swing points, but merely knowing where those price points are does not necessarily guarantee us a safe-boarding pass and a comfortable berth.  Click here for information about the upcoming Hidden Pivot Webinar and a $50 discount.

The 1405.25 target flagged here earlier is still my minimum downside objective for the near term as well as a good place to try bottom-fishing. You can do this with camouflage, or alternatively with a straight bid at 1405.50 and a three-tick stop-loss.  To view the chart associated with the target, check Friday's tout  in the archive, since nothing of substance has changed.  _______ UPDATE (December 26, 8:52 p.m. EST): Subsequent price action has lowered our correction target a tad, to 1403.50.  This new Hidden Pivot support can be traded as suggested above -- either via 'camouflage', or with a straight bid and three-tick stop-loss. _______ UPDATE December 27, 10:56 a.m. EST):  To paraphrase Lawrence Welk: suh-prize suh-prize!  The futures have bounced 4 points so far from a low at exactly 1403.50. Since I'd suggested a three-tick stop-loss off a straight bid, you should have exited half of an assumed four-contract position at 1406.50. For now, use a 1402.50 stop-loss for the rest. UPDATE (11:31 a.m.):  We exited the remaining two contracts on the stop for a theoretical trading gain of $200. The breach of the midpoint implies that the downtrend will continue at least to its 'D' sibling, 1378.50.

The 5-minute chart (see inset) shows why a relapse to 1405.25 seems logical at the moment. Because this midpoint pivot lies in the middle of nowhere relative to any 'structural' supports, you can bottom-fish it with a stop-loss as tight as three ticks. Camouflage is preferred, though, and if you're planning on doing it that way, I'd suggest looking for your opportunity on the 5-minute chart  or less.  Click here to sample Rick’s Picks, the chat room, daily trading ‘touts’ and impromptu online trading sessions for free.

Assuming the 1391.25 low is a valid print, tonight's shakedown ranks as one of the more brazen in the sordid annals of U.S. markets. Notice, however, that the scumbuckets who orchestrated this crime used a 1390.50 low from a couple of weeks ago to apply the brakes.  Because the dive stopped three ticks shy of that low, it failed to achieve the status of bearish impulsive leg on the daily chart. This distinction could prove to be academic if Congress actually pushes our already doomed economy over the cliff.  For now, though, we'll assume that lower lows are most unlikely in the weeks ahead unless the proposed tax increases and spending cuts are allowed by Congressional inaction to hit full-force. That would be a far cry from the kick-the-can outcome we've been expecting, but perhaps we should not have underestimated Obama's radical zeal for deliberately creating the kind of crisis that only Big Government can "solve".  Click here to sample Rick's Picks, the chat room, daily trading 'touts' and impromptu online trading sessions for free.

We gauge the strength of rallies and declines not only by how easily they push past Hidden Pivot 'p' and 'D' targets, but by how long it takes them to do so.  In this case, it took the E-Mini S&Ps four days to blow past a 1437.75 target (basis the December contract) that we discovered -- and which some of you shorted -- during last Wednesday's tutorial session. The impulsive thrust will have bullish implications for the near term, but not powerfully so.  If the futures had pushed decisively above the 1437.75 pivot within hours of first encountering it, we might have inferred that the obligatory Christimas rally was going to be a real doozey. As things stand, however, because it took four days and a running start to achieve this modest feat, we should expect more of a wafting effect into year's end as portfolio managers take advantage of the absence of sellers, including bears now in retreat. Most immediately, the rally would appear to have a lock on the 1447.75 target shown. It's not far above, and I would strongly recommended shorting there, if only for a scalp-trade. 'Camouflageurs' should seek to initiate the trade on the 5-minute chart or less, using a stop-loss of no more than five ticks per contract. If you're not familiar with the technique, get short simply by offering at 1447.75, stop 1448.50. In either case, you'll be on your own if the order fills. Of course, it is suggested that you maintain the 1:3  risk:reward that I recommend for all trades from start to finish.  Please note that this one is likely to fill at night if the futures rally only moderately from the day-session settlement price. ______ UPDATE (2:27 p.m. EST):  In the soporific flux of an especially tedious day, the