ESU10

The futures were down the equivalent of a hundred Dow points early Wednesday morning, driven by weak Asian markets waxing fearful over the U.S economy's apparent relapse into incurable sickness. The low so far tonight has been 1107.25, but there's a Hidden Pivot support at 1101.00 that we should use as a minmum downside target for now. The fact that the decline of the last three days is occurring without the future's having exceeded the 1129.50 peak of June 21 (see chart) is quite bearish, the moreso because bulls spent so much time just beneath it trying to break through.

Five days' worth of amazingly boring action have not altered the fact that minor targets not far above continue to beckon the futures higher. A well-advertised one at 1136.50 -- short there, stop 1137.25, if you please -- will still serve nicely as our minimum upside objective, but we should also be prepared for this brick to fall out of orbit if the deathly feeble buying that has held it aloft should one day dry up completely.  Diligent traders should look for bearish camouflage opportunities on the 5-minute chart. _______ UPDATE (10:54 a.m. EDT):  The futures fell hard this morning after having provided no low-risk opportunities to get short overnight. Even on the two-minute chart there were no abc down-patterns with the single-bar 'c' we require for 'camouflage'.  In retrospect, the only play was to have shorted the manipulated head-fake that occurred on the day's session's opening bars.

I benchmarked a couple of Hidden Pivot resistance points earlier, but they should be put out of mind for now, since the futures spent all of last week failing to knock off a manifestly more important resistance peak at 1129.50 recorded on June  20. Late Sunday night they created a bullish impulse leg on the 5-minute chart, with an implied 'C' entry at 1118.25.and an 1116.25 stop-loss. This seems too risky to jump on, although there was potential for lesser patterns to develop on the same chart with commensurately lower risk of as little as three ticks. (In the accompanying chart, I've illustrated one way this could play out.)

No change:  An all-too-familiar rally target at 1136.50 remains our minimum upside expectation, but the futures will need to surpass mid-May’s 1142.75 peak to hint of still more upside to come.  There’s a second pattern that projects to 1141.25, but that too would fall just a tad shy.  Either of these Hidden Pivots can be shorted with a one-point stop-loss, but I wouldn’t suggest initiating the trade if the target is hit in the final 60 minutes of the session. Please note that you’ll be on your own if it fills.

An ancient rally target at 1136.50 still beckons, although it would take a pop above mid-May's 1142.75 peak today to hint of still more upside to come.  There's a second pattern that projects to 1141.25, but that too would fall just a tad shy.  Either of these Hidden Pivots can be shorted with a one-point stop-loss, but I wouldn't suggest initiating the trade if the target is hit in the final 60 minutes of the session. Please note that you'll be on your own if it fills.

Two hours into the session, the futures looked like they were headed up to at least 1127.25, having exceeded that Hidden Pivot's sibling midpoint resistance at 1120.25 by 2.50 points.  Instead, they turned tail and bounced lower, suggesting a failure of nerve just beneath Monday's high.  The rally target will remain valid nonetheless unless point 'C' (i.e., 1113.25) is exceeded to the downside, but we would suggest initiating a bull trade only if camouflage materializes in exactly the way show in the chart. The key "external" peak is a very obscure one at 1119.25, and its breach -- though not a breach of the 1120.00 peak just to the left of it -- would subtly announce a possible breakout toward 1127.25.  There are other camouflage possibilities that could develop, but the one pictured is as subtle -- and therefore as safe -- as any I can imagine. _______ UPDATE (3:55 a.m. EDT):  The 1119.25 peak proved important and useful, though not in the way we might have hoped; for instead of providing us with a subtle impulse leg to leverage, the seemingly obscure peak stopped a rally cold that had taken six hours to develop. Since the futures did not exceed the peak -- they double-topped with it at exactly 1119.25 -- there was no impulse leg and therefore no trade.

The futures continue to lag the Dow, since yesterday's rally in the Mini S&Ps conspicuously failed to create a bullish impulse leg on the daily chart.  That would have taken an 1129.75 print, versus an actual high at 1124.25.  Coming in today, however, a print at 1143.00 is all it would take to remedy this vehicle's seeming timidity, since that would exceed two "external" peaks of daily-chart degree.  We're in crucial territory here, for sure, and it is essential that buyers take out both of the external peaks without pausing for breath if they are to dominate for the remainder of the summer.

For all of the jacking around on Friday, buyers were unable to create even a single impulse leg on the lowly 15-minute chart. The day's rallies, such as they were, exceeded one peak but failed to muster the required second, and so we are inclined to see this modest upwardliness as just noise and no more. Even so, to avoid being caught unawares we must monitor two prior peaks on the daily chart carefully, since any unpaused rally that exceeds both would presage more bullish action well into autumn. The peaks lie, respectively, at 1129.50 and 1142.75, so it wouldn't take much to reinvigorate the bear rally begun nearly a month ago.

The futures were taking a second leg down to at least 1092.25 when the session ended. That number, a midpoint Hidden Pivot support, will work for night owls as a place to try bottom-fishing.  A three-tick stop-loss is appropriate, but if it's hit hard, a 'd' target at 1080.25 will become the new minimum downside objective. _______ UPDATE (3:19 p.m. EDT): The bounce from an overnight low of 1092.25 amounted to a barely tradable 3.75 points. ES then relapsed to a very short-squeezable pre-opening low at 1083.50. (The news backdrop was that Q2 GDP was even more anemic than had been expected.)   As of this moment, the squeeze has continued in the form of an artificial, Friday Special rally. This hoax has yet to create a bullish impulse leg even on the lowly 15-minute chart, but I wouldn't rule out the possiblity, since DaBoyz still have another 45 minutes to play on the nervous Nellies' fears.