ESU10

With 220 points of rally room remaining for the Dow, and at least 25 more points for this vehicle, we'll chalk up yesterday's dithering as a consolidation. In any event, it would take a rather large correction (i.e., 60 points) to knock the futures off-track from the 1136.50 target that I've projected.  I've reproduced a chart as a reminder of the rally pattern's comeliness, but also to call attention to the sort of pattern that demands the use of a one-off 'A' (i.e., one with a point 'B' that has failed by a country mile to surpass some obvious high that has preceded it).

Yesterday's metaphysically enfeebled rally was a downpayment on a bigger push to at least 1136.50 that I've projected for the week. I've reproduced a chart that shows an intraday high that missed its 1112.00 target by a single tick.  Was this foretold by the single-bar A-B-C coordinates I've highlighted? As far as I'm concerned, you can never go far wrong falling crazy-in-love with patterns described by three single-bar highs/lows.  For trading purposes, night owls might want to focus on the tail end of the chart, with its bull ABC projecting to 1115.25.  Catching a ride north will carry the same risk as last night, however: all intraday patterns point higher, ensuring that "everyone" will be trying to get long. _______ UPDATE (10:39 a.m. EDT):  The futures ensured that only a very diligent few would catch the rally when they launched at 2:15 a.m. off a gratuitous dip beneath Monday night's lows.  The high was 1118.75 -- achieved, of course, on the opening bar.  ES then retrenched to a so-far low of 1109.50, presumably to load up for the next push. 

The bull pattern shown in the chart projects to 1136.50 -- equivalent to a rally of about 300 points in the Dow. The 1093.75 midpoint resistance put up a good fight as last week drew to a close, but in the end, as we have seen so often, selling was overpowered by short-covering.  As of around 9 p.m. EDT Sunday night, the futures were on a minor "buy" signal tripped at 1101.00. The rally appears likely to hit 1107.75 if the 1103.25 midpoint is exceeded, but you'll have to board this one on your own, since there are too many obvious ABC patterns pointing higher, and therefore the potential for numerous stop-outs below a series of 'C's.

The stock-market surge yesterday brought us right up to very visible trendline resistance, and it is difficult to believe that the equity bulls won't find a way to break that trendline decisively.  The daily chart of the e-mini S&P 500 futures is still not at all bullish, but a 43-point move from here will do the trick.  Throw in another 13 points and we'll have a really convincing impulse wave.  Specifically, 1129.75 will satisfy our minimum standard of one internal and one external prior high, but 1143 will give us a second external, at which time we might have to start taking the bounce off of 1000 seriously.  All of this would occur within a larger bearish context, however.  In Wednesday's tutorial session, we looked at the monthly S&P 500 cash chart and found that the index is on course for at least 833.08, and possibly 446.35.  The attached graphic shows this pattern in red, plus an alternative pattern whose midpoint was almost hit by the famous 666 low.  (Posted by Doug McLagan)

The gnarly bull pattern to 1093.75 or higher is still valid in theory, but we should focus on bearish possibilities right now, since, as of early Thursday morning, the futures have been tracing out a distribution below the 1065 midpoint support of the larger pattern shown in the chart. The downtrend projects to 1043.75, yielding the equivalent of a 170-point fall in the Dow.  A lesser pattern projects to 1047.25, and you can try bottom-fishing there with a stop-loss as tight as 3-4 ticks if the opportunity arises before 2 p.m. EDT. (We'd want to be out of the position before the bell.)  The pivot at 1043.75 could also be bought with a very tight stop-loss, but the lesser pattern looks more promising. _______ UPDATE (11:17  a.m. EDT): The futures have gone the "wrong" way today, Banshee-screaming their way up to 1093.50 (!) s0 far. Perhaps it is a reaction  to the latest increase in joblessness? Or a delayed reaction to the Depressionary implications of the steep new decline in home sales?  Or maybe it's jobless speculators, thrilled with the latest forever-and-a-day extension of their unemployment benefits and eager to deploy a portion of their new lucre in index futures? We'll probably never know which, or why, but it is clear that Wall Street is in an exuberant mood this morning. If you shorted the top as was possible using my target, take partial profits, keep a tight stop, and don't trust the little sonofabitch for even a minute.

The bull pattern show in the chart is as ugly as they get, but we may have to face up to its most exuberant possibility -- i.e., a thrust to as high as 1136.50. The midpoint is 1093.75, but it's not worth much for analytical purposes because it lies in the thick of the supply zone created last week.  I have my doubts DaBoyz will be able to put shorts on the run for a second straight day, but they will at least have help from the recurring dearth of sellers.

Yesterday's flim-flam price action created a pattern that projects to as low as 1033.25 over the near-term, subject to a bounce from a midpoint support at 1052.00. This assumes another leg down as robust as the impulsive decline recorded on Friday, but I doubt sellers will be feeling so feisty after yesterday's exhausting bout of mud-wrestling. My outlook is bearish nonetheless, but look for more hysterics and conniptions first before the futures turn lower, perhaps later in the day. ______ UPDATE (2:05 p.m. EDT): Bears are getting deservedly reamed today after failing to do much harm to the 1052.00 support identified above.  The actual low was 1050.75, and sellers seem to have abandoned their mission after the futures turned higher from just below the Hidden Pivot support.  The futures have traded as high as 1075.00, but they'll need to surpass a look-to-the-left peak at 1076.00 from Friday to put bears out of commission for perhaps another day or two.

Two days later, and already I've forgotten just what was supposed to have caused stocks to fall so hard on Friday. In any event, the selloff brought a 1035.75 midpoint support into play as a logical minimum downside objective. The target is shown in the accompanying chart, and it looks compelling enough to suggest we should hold a bearish bias until it is reached. A short or a long derived from the target should be tied to a camouflage entry, since Sunday night's flabby action looked "difficult" to short, and because midpoint supports off the daily chart will rarely be precisely reliable for bottom-fishing.

Bor-ing. We haven't got gotten much satisfaction hovering at 1108.25, waiting to lay out shorts at what had seemed to be an obvious an opportune place. The target remains valid, though, and we will find a way to use it if the futures ever get there. Check the chat room and this tout for intraday guidance if the target gets close.