ESH12

Yesterday's tout turned out to have been unnecessarily wary of a short-squeeze.  Why no ambush? As I've suggested in today's commentary, perhaps the bears who played patsy for Tuesday's big rally had misgivings about the supposed significance of the news concerning Spain's last bond auction.  For Wednesday night, the only intresting opportunity that beckons right now is a bid at the 1226.50 midpoint of the pattern shown. Camouflage is preferred, using an entry point on a chart of lesser degree, but if you'd prefer the easier route, placed a 1225.75 stop beneath your 1226.50 bid.  You'll be on your own if this one fills. Please note that a move overnight above the 1239.50 point 'C' would invalidate the trade.

Yesterday's monster rally fell just shy of the 1240.00 target I disseminated in a morning update, but if the futures break loose today and close above it, that would augur more upside to as high as 1284.25 (aka 'D') over the near term. Our trading bias would be aggressively bullish above 1240.00, but camouflage opportunities derived from the hourly chart may be limited. At present, the best of them would seem to lie in the 1233.75 peak highlighted in the chart. A 'b-c' pullback from a few ticks above it would offer a buying opportunity that shouldn't be passed up if the standard 'camo' conditions are met. I've sketched this out hypothetically for your further guidance and will provide a tracking position if things play out more or less as imagined. _______ UPDATE (10:08 a.m.EST):  There were no subtle camouflage opportunities such as the one I'd drawn, since DaBoyz greedily squeezed shorts for all they were worth overnight, creating a too-obvious impulse leg in the process. It is still valid, by the way (60m, A=1195.50 on 12/19, and B=1249.00, C=?), so bears shouldn't get their hopes too high merely because stocks are falling this morning.  A 13.50-point upthrust now from anywhere north of 1215.50 should be viewed as the possible start of a much bigger move with 40 points of additional potential. Camouflageurs should plan accordingly.

Someone in the chat room appears to have filled a bid down around 1196.50, a Hidden Pivot highlighted during Monday's impromptu online session. Although I'm not going to track the position because the trend is too well developed, perhaps we can try to get short when buyers run out of steam.  We haven't done much of this, mainly because it's been easier to nail swing lows that go against the trend in a presumptive bear market.  For starters, let's use the point 'X' of the downtrending pattern shown to get aboard. Entry will need to be via camouflage, though, since the implied theoretical risk here is about 2.50 points, or $125.  As I explained during yesterday morning's sessions, we want to "do" the trade in whatever time frame yields a downtrending abc pattern with no more than five ticks ($62) of entry risk from point 'X'.  I'll establish a tracking position for your further guidance if there's an entry signal that meets all of our criteria. _______ UPDATE (10:02 a.m. EST): Today's wicked upthrust has caught shorts with their pants down. The proximal cause of this squeeze is an apparently successful auction of Spanish debt and an uptick in housing construction.  Interestingly, the uptick is mainly in multifamily apartments, implying that the powerful bull market in residential rentals is starting to heat up -- to get legs, even.  Technically speaking, the short squeeze is bullishly impulsive on the hourly chart and could go all the way to 1240.00 before hitting a Hidden Pivot impediment (A=1177.25 on November 30, B=1266.00 on December 8 = 1240.00 ‘p’).

It’s getting a bit late for a Santa rally, but you can’t blame DaBoyz for trying – trying every night, actually, after most U.S. traders have gone to bed and there are almost no sellers to resist the stock market’s natural buoyancy in a time of unprecedented monetary easing.  We’ve lost track of how many times in the last month index futures hit their highs in the wee hours, only to fall into the red during the regular trading session. It happened yet again Sunday night when the E-Mini S&Ps wafted the equivalent of 90 Dow points higher on volume-less trading before dropping sharply to close off a hundred points. We’d held a long position in the March futures going into the weekend, and although the position showed a paper gain of $600 when we exited on a stop at 1210.75 Monday morning, we bailed out well off the overnight highs. This wouldn’t be the first time we got long with an ultra tight stop-loss using the Hidden Pivot “camouflage” technique, nor would it be the first time that the uptrend we boarded went nowhere.  Catching the occasional big wave is always our intention when we do “camo” trades, but given the choppy, go-nowhere, do-nothing price action in recent months, we’ve had to adjust our “long-term” horizon downward not to months, weeks, or days, but to hours. Santa’s Influence Nil Concerning Santa’s seasonal influence on Wall Street’s otherwise pointless, algorithm-driven histrionics, news from Europe has overshadowed so-so reports on holiday retail sales in the U.S. The last such report suggested that many shoppers had finished early this year and that there would not be much good news coming down the home stretch. Such “facts” seem impossible to determine, though, since it would require exit polls at the malls to say

We are long a single contract with a cost basis of 1156.00. The 17-point drop from Friday's high missed our 1207.75 stop-loss by two ticks, but be prepared to exit on that number Sunday night. That would give us a gain worth a little more than $2500 on paper.  ______ UPDATE (7:29 p.m. EST): The futures touched the stop moments ago, so we'll move to the sidelines. It's always hard to tell about these Sunday night shakedowns, but we'll avoid this one since both 'p' (1206.00 ) and 'D' 1197.75 coincide with previous lows that are likely to entice the riff-raff into bottom-fishing.  However, if the futures get away from the dirtballs who are maneuvering them lower at this moment, they could plummet to 1179.00. That's a Hidden Pivot you can bottom-fish either with camouflage or an 1179.25 bid, stop 1178.25.  Its 'p' sibling lies at 1202.00, but bidding there is suggested only for those able to employ camouflage. If an order fills there via a picture perfect 'camo' reversal, I'll establish a tracking position of four contracts for your further guidance. _______ FURTHER GUIDANCE (11:12 a.m. EST): We initiated a long position at 1206.00 following a perfect 'camo' pattern off an overnight bottom at 1201.75. On the 10-minute chart, the abc coordinates -- all single-bar! -- lay, respectively, at 1201.75, 1207.75 and 1204.50.  Two contracts were to have been exited at the 1207.50 'p' midpoint, and a third at d=1210.50. This gave us a profit-adjusted cost basis of 1198.50 for the contract that remained. It was exited minutes ago at 1210.75, based on the bearish impulse leg created via a dip beneath the 1211.00 'external' low recorded on the way up at 4:10 a.m. Our theoretical paper profit for each four-lot entered was $600. It would seem that in

We hold two contracts with an 1178.00 cost basis that has been adjusted to reflect paper gains on half the position already exited. Continue to use a stop-loss at 1205.75, but close out one of the contracts if 1222.00 is reached first. (Note: This is lower than the number originally given.)  If the order fills, stop yourself out of the single contract that would remain if the futures create a bearish impulse leg on the 30-minute chart.  As we went to press Thursday night, the futures appeared bound for a Hidden Pivot at 1222.25, predicated on a decisive push through the 1215.00 midpoint sibling of that number. If 1222.25 is exceeded by more than four ticks, however, it would portend more upside on Friday to as high as 1230.25. _______ UPDATE (3:56 a.m. EST):  We exited a third contract two ticks off the so-far overnight high, dodging a subsequent 6.50-point pullback in the process, when the futures spiked to exactly 1222.50 at around 2:25 a.m. Imputing theoretical gains so far to our remaining contract gives it a cost basis of 1156.00. At a current price of 1218.50, that implies a paper gain so far of $3100 per contract. Set a 1207.75 stop-loss for now, but switch to a 4.00-point trailing stop above 1227.00

We doted on the 1198.00 target during yesterday's tutorial session, licking our chops at the prospect of getting in at a trampoline bottom. Alas, fatigued sellers were unable to push this pup any lower than 1202.50.  The downside target is still valid, as is another less promising one at 1199.75, but bottom-fishing is recommended only for those who are camouflage-equipped. If you're not but desperate to do something, anything, you can try bidding 1195.25 with a 1.00-point stop-loss.  That's the lowest target I can extrapolate from the 15-minute chart (see inset). _______ UPDATE (9:17 a.m. EST): I'm establishing a tracking position, since the 1198.00 target nailed the exact low of this so-far 20-point rally. Also, a couple of chat-roomers who work the graveyard shift evidently initiated positions at the low. Assuming four contracts purchased, cash out half of them here for around 1218.00.  That will give us an effective cost basis of 1178.00 for the two contracts that remain. Tie them to a 1205.75 stop-loss for now, o-c-o with an order to sell one contract at 1226.00. Hitting the low to the exact tick was a simple parlor trick that you can learn in a month. Click here if you think you're ready to try.

Tuesday night's ratcheting, slow-motion rally suggests DaBoyz are getting ready to pull the rug out from beneath widows and pensioners once the latter have exhausted their buying power. If and when that happens, expect the futures to fall to at least 1198.00, a Hidden Pivot support that you can buy either via camouflage or a very tight stop. Alternatively, bulls would be back in charge if they can pop this rig above 1245.50 today.

The futures were wafting toward a presumptive Hidden Pivot rally target at 1241.50 Monday night, but a bigger picture implied a bull trap in gestation.  That's because Monday's downdraft was impulsive on the hourly chart (see inset), but the E-Minis would nonetheless become a speculative buy at either the 'p' or 'D' hidden supports shown.  The same pattern could prove to be shortable as well, but you'd need to initiate the trade on a lesser chart with a downtrending abc pattern that would subject you to theoretical risk of no more than five ticks.