ESH12

We've been focused on relatively trivial -- albeit tradable -- rally targets recently, but the accompanying chart is intended to coax the bullish imagination a bit. It shows an ABC rally pattern stretching back to early October with a 1362.25 target. That's equivalent to a Dow rally of about 700 points, which would boost the blue chip average comfortably above 13,000. The midpoint resistance associated with the target lies at 1252.00, and although the Hidden Pivot 'effect' at that price is not especially compelling, we should not overlook the fact that the futures have used it this week as a launching pad.

In tonight's commentary, I described the stock market as patiently biding its time in gluttonous anticipation of news sufficient to reignite the massive short-squeeze that kicked off the New Year.  Or so it would seem. Sentiment is so ridiculously bullish right now as to reflect the gutlessness of sellers.  They'll return with a vengeance one day soon, for sure. But for now, DaBoyz are unwitting instruments in fulfilling a Hidden Pivot rally target at 1296.75 given here earlier.  They've spent the last five sessions playing toe-sies with the target's midpoint sibling, 1278.50, doubtless unaware that such an impediment even existed. Night owls should look for camouflage on the 10-minute chart, where a low-risk long was triggered about two hours ago at 1278.00 (A=1275.00, B=12799.00, C=1277.00). You might have to babysit the position overnight, however, since the futures look skittish about breaking out to new highs without help from the army of fools who will clamber aboard at the opening bell. Want to learn how we use Hidden Pivots and “camouflage” to reduce entry risk to relatively small change? Click here

What looks like a conventional double top on the daily chart is actually a bullish impulse leg that projects to 1296.75.  The midpoint Hidden Pivot resistance associated with that number lies at 1278.25, and we should infer that a close above it would make a follow-through to the target an odds-on bet.  More immediately, because the pullback from Friday's very nasty bull-trap high offers no particularly promising spots for bottom-fishing., I'll suggest looking for a camouflage opportunities based on ABC rallies on the one-minute chart.  We're zooming down all the way here because, as of around 9:13 p.m. Sunday night, I could find no camo opportunities on the two-minute chart.

Yet another day of sloppy price action has left my outlook unchanged.  I expect the next move to be higher, and once decisively past 1280.75 the futures will become an odds-on bet to reach a minimum 1298.50. As noted here previously, camouflageurs should look for opportunities long and short on intraday charts of 15-minute degree or less.

The futures spent the day digesting Tuesday's unwarranted gains, but we should expect them to continue higher because there's nothing in the news that might have emboldened sellers. Although the 1280.00 peak of the short squeeze fell a few points shy of a Hidden Pivot target at 1283.00, a closer inspection reveals that it actually exceeded another target by a similar amount, negating any mildly bearish conclusions we might otherwise have drawn. Now, if buyers can push this windbag past the 1280.75 midpoint resistance shown in the chart, we should expect it to continue higher to at least 1298.50, the pattern's 'D' target.  Camouflageurs will need to zoom down to the 15-minute chart, and to look for external peaks created January 3 on the way down, to ferret out an opportunity subtle enough for our purposes.

Yesterday's gap through at least two Hidden Pivot midpoints suggests bulls will have little trouble pushing this vehicle past the 1283.00 peak recorded in late October. The move targets a minimum 1293.75, a Hidden Pivot that will not be particularly useful for trading because of its close proximity to the round number.  Supply will thicken between 1300 and 1350, but opportunities to get aboard using camouflage appear limited on the daily chart, since the closest external peak above 1300 lies at 1331.50.  You should stay tuned nonetheless, since we may be able to catch a ride for at least a part of the expected 80-point thrust using benchmarks from the lesser charts.

It has been a little more than three days since the futures last traded -- about as long an interval as I might have thought permissible, legally speaking. When the E-Mini's come back to life, however, it seems doubtful they'll continue Friday's sauntering pace. More likely is that they will leap up or down, impelled by some news headline.  Trouble is, the dim bulbs who bring us the news have not yet sprung back to life themselves -- are more likely nursing hangovers or gazing at their own navels -- and so the top stories of the hour are focused on sordid local or national events incapable of moving markets: i.e., the Iowa caucus, and the arrest of a suspect in the L.A. arsons.  Under the circumstances, the best I can do with this vehicle, analytically speaking, is to pick up with where things left off on Friday. That would imply immediate upside potential to as high as 1284.50, subject to midpoint resistance at 1263.75.  Both of these Hidden Pivots are shown in the chart, and if you determine to use either of them bullishly or bearishly, you'll be calling the shots, since I cannot foresee how DaBoyz will manipulate the New Year's opening hour. _______ UPDATE (10:21 a.m. EST): DaScumbags' algorithms have short-squeezed the opening for 250 Dow points, locking out all traders except those who were foolhardy enough to be on board at Friday's close. The so-far high has fallen a few points short of the 1284.50 target, which remains valid.

There appears to be zero buying interest at the moment, since the futures have been unable to achieve even the modest yardage needed to turn the daily chart impulsively bullish. Yesterday this weakness was evident in the failure of the futures for the second straight day to surpass the 1266.00 high recorded on December 8.  Still, bullish buyers are not needed to drive the market sharply higher -- only short-covering bears. The "news" that will catalyze this hysteria is impossible to predict, but until it comes we can only continue to mark time by nibbling on 'camo' buying opportunities as it suits us. Yesterday, however, index futures were easier to short -- and so we did during the weekly tutorial session. For Wednesday night, a mixed technical picture suggests there will be action only for nimble scalpers.  Despite Wednesday's selloff, however, my outlook for overnight is no worse than neutral.

The futures receded timidly yesterday after bullying a minor midpoint resistance at 1163.25. The overshoot was just three ticks, but if buyers had kept going they might have rampaged all the way up to...1167.00!  That's a Hidden Pivot target of minor consequences, but as we pointed out in an intraday update, it's within spitting distance of the 1169.25 print that would turn the daily chart unambiguously, impulsively bullish.  We advised camouflageurs to take a few small shots at these levels, since, even though there's no strong evidence the futures are about to pop, we'll be getting great odds. Keep in mind that if stocks do get short-squeezed, the drama is all but certain to occur overnight, shutting out most of the trading world. Accordingly, night owls should be prepared for a bullish reversal from 1255.25, a 'D' correction target shown in the chart. The downtrend has stalled precisely at the 1258.00 midpoint, so there's a possibility the turn will come from these levels. _______ UPDATE (10:36 a.m. EST):  The correction has overshot 1255.25, creating a new (and potentially tradable) downside target at 1246.25. Camouflageurs might look to get short if the upward correction of the moment hits 1250.75, a p midpoint associated with 1246.25. (Note:  Within 45 minutes of the above update, during the weekly tutorial session, we got short via camouflage. You can see how by reviewing the recording of the session. It is accessible online to all who have taken the Hidden Pivot Webinar and who are registered.  Hitting these highs and lows within a tick or two is a simple parlor trick that you too can learn in a month. Click here if you think you’re ready to try.