ESU10

Yesterday's swoon just missed my target, although a couple of eagle-eyed pivoteers in the chat room noticed that by NOT using the one-off 'A' to do the calculation, as is my habit, one could have nailed the 1037.00 intraday low to-the-tick.  I'd do it again if faced with the same choice, however, since I've always been a sucker for hottie, one-off 'A's like the one in this case.  So now what?  The subsequent rally created a bullish impulse leg on the hourly chart, confirming my earlier suspicion that the market has been too, too resilient recently in the face of some of the worst economic news since the 1930s. But then,  I'd already mentioned my skepticism about the Hindenburg Omen, which has flashed three -- count 'em, t-h-r-e-e! -- signals lately. It couldn't have helped that even the Wall Street Journal took note of 'Hindenburg' this time around.  For my part, I'll simply go with the flow for now, drum-rolling the 1067.75 rally target shown in the chart.  Its sibling midpoint is 1060.75, and any rally that exceeds that number would imply more upside to the target itself. Of course, all bets would be off if the point ''C' low is breached first. As of around 2:30 a.m., it was still in play, albeit barely. Note to night owls:  I don't trust this one, but if a second point 'C' forms you should jump on the new 'X' trigger with a buy-stop. _______  UPDATE (12:04 p.m. EDT):  Waiting for a second 'C' to form as suggested would have worked nicely, triggering a long entry at 1057.25 and partial-profit-taking  at 1060.75, the Hidden Pivot midpoint of the pattern. The futures turned flaky 1.00 point above it, though, and went into gratuitous spasms on the regular-session opening.  They are trading slightly lower on the day at the moment, but it still looks like bears are

It was painful to watch bears struggle for yardage yesterday, even though they had the "best" bad news in months to help them out.  With the Guvmint's $8,000 tax credit no longer available to home buyers, housing starts have of course collapsed.  This could not have surprised anyone save Kudlow and a few thousand economists, really, but it is in the nature of Wall Street to feign "shock" whenever such truly bad news crosses the tape.  When the dust had settled, however, the Dow was off just 133 points, well off the day's lows; and the E-Mini S&Ps had yet to achieve our Hidden Pivot target at 1040.25, having gotten no lower than 1044.00.  I predicted a relapse to the target during yesterday's weekly tutorial session -- and it shall pass, I am sure, in the fullness of time -- but the target itself holds less and less appeal with each new day's failure to achieve it.  A 1038.75 stop-loss would be appropriate for traders who, bored out of their minds, are eager  to so "something" just to keep from rusting up.

I'm still holding to a 1040.25 downside target, although bears may die from the effort, so fearsome has been their struggle to take this vehicle down.  There's another, lesser Hidden Pivot support at 1047.00 that we can use as an interim target, since its sibling midpoint at 1063.50 has already been decisively breached. If and when the downtrend achieves 1047.00, that would take out July 20's key low at 1050.75, generating a robustly new impulse leg on the hourly chart. _____ UPDATE:  And what a struggle it was, once again, for the bears!  They had some of the worst housing-starts data of the last hundred years to work with, and even though such news should have sent stocks straight downhill, the Dow ended the day 50 points off its lows, down a mere 133 points.  Scary!  With administered rates already at zero, we can rule out expectations of more easing as a cause of yesterday's relatively modest loss.

Friday's end-of-day rally went limp after surpassing only one "external" peak on the hourly chart, implying that bulls were just bluffing. They could soon get a boost from short-covering, however, since, early Monday morning, DaBoyz were somehow managing to hold index futures aloft in a narrow range just shy of Friday's peak.  However, the buyers would have to fake their way all the way up to 1099.00 to negate the bearish target at 1040.25 given here earlier. Shorts should set a cautionary alert at 1078.25 nonetheless, since that's all it would take to turn the hourly chart bullish.

I drum-rolled a 1040.25 downside target in the chat room yesterday, and it still looks like a no-brainer. A plunge to that number should be viewed as likely if and when the midpoint support with which it is associated, 1069.25, gives way. The so-far three-tick penetration of the support was not sufficient for us to have inferred that the jig was up yet for DaSleazeballs, who were hard at work near the close attempting to make a distribution opportunity out of a pathetic five-point rally.

Even under the magnifying glass of yesterday's tutorial session there was precious little to do or to discover. Bullish and bearish influences on the daily chart are roughly equal, making it relatively easy for DaBoyz to wait for opportunities to either shake the futures down or squeeze them higher.   This could spell opportunity only for traders patient enough to wait for the subtlest possible impulse legs to develop on the one- and three-minute charts. _______ UPDATE (2:06 p.m. EDT):  The futures have gotten hit hard today, so we need a new downside target.  Using A=1124.50 from August 10, a fairly compelling pattern gives a downside target at 1040.25. This is corroborated by the fact that the downside stall has so far been at 1068.50, three ticks from the calculated midpoint 1069.25. What this implies is that a more decisive breach of the support -- say, 1067.00 -- is likely to send the futures plummeting to 1040.25, give or take just a few ticks.

Downside targets equivalent to the ones given today for the Dow Industrials lie, respectively, at 1062.00 and 1035.00. Alternatively, it would take a print today or tomorrow at 1092.00 to put the squeeze on bears, since that would create a robustly bullish impulse leg on the hourly chart.

I won't bore you with the details, but technically speaking, last week's slide was impulsively bearish only on the intraday charts, not on the daily. (Please note: The decline on the DJIA's chart WAS bearishly impulsive.)  My gut feeling is that the futures will need to head-fake above Friday's 1089.00 peak before they plunge in earnest.  If not, a nearly 14-point fall awaits this morning, since that's what it would take to reach the midpoint support of the pattern shown.

I'd said a close below 1082.00 would augur more downside to at least 1050.75, and so the futures coyly rallied ten points off their lows yesterday, barely meeting my criterion with a close at 1079.25.  The price action smells, and tonight's phony rally has not changed my mind about a 30-point plunge being imminent. Even so, let's not fail to take heed of the urgent manipulation by DaBoyz yesterday as they attempt to trigger off one more distributive rally before pulling the plug.  First, leveraging lousy news from Cisco, there was Wednesday night's takedown on zero volume.  Then, They compounded the crime, pulling out the rug Thursday morning on the opening bar to shake out the last of the Cisco scaredy cats.  I doubt there'll be "good" news sufficient to short-squeeze the nervous Nellies on Friday, but then, DaBoyz need only push the futures to 1092.00 to hang them on the ropes.