ESU10

The 1108.25 target touted here yesterday remains valid, and I'd suggest shorting it in any way that suits your style. The hesitation yesterday at the midpoint resistance implies that it will work, but the usual caveats apply.  Virtually all serious rallies begin with laughable ones like the one that has unfolded over the past week. However, this one would become pseudo-legitimate if it hits 1143.00, since that would create a bullish impulse leg of daily-chart degree. Keep in mind that in order to qualify as such, the rally would need to be unbroken between peaks #1 and #2 (as shown in the accompanying chart).

The rally appears to be targeted on a Hidden Pivot resistance well above, at  1108.25, but it'll first have to clear a midpoint resistance at 1081.25 that stopped yesterday's bunny-hop cold. The upthrust was not as feeble as it first appears, however, since, as you can see in the accompanying chart, it took out a look-to-the-left-peak that is well concealed within a three-day supply zone recorded weeks earlier.  My hunch is that an 'X entry will work for getting long, but I am unwilling to risk the implied 3.75-point stop-loss. Instead, if the trade triggers, I'll suggest cutting the risk down to size by using whatever camouflage may be afforded by a lesser chart; or by using a "time stop" to exit the trade if it doesn't take off right away.  If 'X' is triggered before the opening bell, however, you should simply get long conventionally and follow Lindsay's rules.  As you will likely have inferred, this trade is for experienced Pivoteers. _______ UPDATE (9:47 a.m. EDT): The trade could not have worked out more perfectly for night owls, since it precisely matched the one I'd sketched out in the chart.  Entry was triggered at 1077.00 around 3:30 a.m. , and four hours later, without having tripped a trailing-stop exit from the 1080.75 midpoint on up,  the futures topped a single tick from the 1088.50 target. The threoretical gain per contact would have been $550.

It's difficult to imagine that yesterday's price action will turn out to have been distribution, so we'll assume the futures are going higher into week's end. The Dark Arts of Hidden Pivotry suggest 1105.50 is possible, but we should also pay heed to the 0.618 Fibo line. Relative to the selloff from the summer solstice high, it comes in at 1081.25 and seems like a logical minimum upside target now that the 50% line at 1066.25 has been breached. Alternatively, if the futures should astonish and delight by collapsing, a midpoint support at 1030.50 will be in play provided 1068.50 has not been exceeded first.

Yesterday's rally blew out every target on the intraday charts, and it would be accurate to say that a Hidden Pivot trader could not have gone far wrong by taking every 'X' entry point of every uptrending ABC. I won't hazard a short-squeeeze target for this morning, although the supply line near 1070 noted in today's commentary would be a logical place for sellers to take a stand. As of midnight, the action was hum-drum, but with a blip around 10 p.m. that suggests nervous-Nellie bears are still having palpitations. If and when they've all dropped dead, stocks are guaranteed to fall like a brick.

Yesterday's synthetic rally was 80% over by the opening bell, and once the session began it took sellers less than an hour to start piling on.  Yet again, however, we shouldn't count DaBoyz out, since there are obviously more than a few panicky shorts still alive. They'll get what they deserve for a second straight day if the futures should push above 1027.50, since that would refresh the bullish impulse on the 15-minute chart. More bullish still would be a move above 1031.50, the midpoint resistance of the pattern begun from yesterday's low. It projects as high as 1049.25.  If the futures should unexpectedly delight by falling, the key support lies at 1014.75, a midpoint pivot. _______ UPDATE (10:22 a.m. EDT):  DaBoyz have shorts by the scrotum once again, but their success has been limited and labored, since the futures have yet to pierce yesterday's high, 1038.50.  The 1049.25 target is very much in play, but I'd suggest keeping a close eye on the 1-minute chart nonetheless, shorting the first abc downtrend, since the squeeze is so noticeably lacking in power.

The futures have been down as much as nine points in subdued trading Monday evening, carving out a low beneath the would-be support of last Thursday's bottom, 1006.00. Still, sellers have shown themselves to be so gutless lately that we shouldn't count on any more of a reality check than our toothsome 992.50 target would seem to allow. The target has been advertised for long enough that I wouldn't suggest trying to bottom-fish with the usual nickel-and-dime stop-loss.  Instead, traders keen to catch a possible swing low should start looking for a camouflaged turn on the 3- or 5-minute chart once the futures reach 994.50 or so on the way down.  If sellers should surprise by overshooting 992.50 by more than a 1.25 points on first contact, take it as a sign that there is significant weakness remaining to be spent over the near term. _______ UPDATE (3:08 p.m. EDT):  We stood pat, enduring a short-squeeze that was equivalent to a DJIA thrust of about 280 points.  The broad averages have since plummeted back to unchanged, and now, assuming any shorts who had survived until yesterday have been gutted, disemboweled and purged, we can perhaps look forward to a resumption of the righteous and redemptive weakness inaugurated by the flash crash two months ago.

Blame seasonality for the fact that sellers were unable to put stocks down for the count yesterday.  Weakness remains the underlying theme, however, since DaBoyz were once again unable to rally the Dow back to unchanged even though volume was relatively light.  The 992.50 target we've been using remains as compelling as ever, but our joy-ride will still be subject to a possible short-squeeze rally today to as high as 1061.00, the midpoint sibling of 992.50.  I wouldn't suggest shorting there mechanically if the opportunity arrives, but it shouldn't be too difficult to find camouflage on the first 'abc' downtrend following a print at or near 1161.00.

I'm sticking with the 992.50 downside target, since the market continues to look so atrocious.  While the broad averages seem capable of  staying afloat, albeit barely, during the day, when there is zero interest, zero sellers, and only Kudlow to buy 'em half-heartedly, just let even a twinge of doubt -- about whatever -- creep in during the afternoon and stocks fall apart. This shouldn't be happening in the days leading up to the  Independence Day holiday, and so we shouldn't be surprised if more weakness lies just ahead.

We were briefly long yesterday morning, unaware that we were buying into an avalanche.  We wound up scratching the trade, but the position was actually profitable for about ten minutes when the futures rallied from within a single tick of the tradable low that had been predicted, a Hidden Pivot support at 1046.75.  The ride was short-lived, however, and ended abruptly when some allegedly shocking consumer confidence numbers hit the tape.  The futures dove in an instant but we came out fine, since we had already taken a partial profit on the position and implemented a cautious trailing stop (all  by way of  detailed, minute-by-minute instructions proffered in the chat room). We wondered aloud just who it is who is doing the expecting whenever these numbers are released.  It would have to be economists, since no one else we can think of would have been wider of the mark.  And now, whither the futures?  992.50 is the target I posted in the chat room, and it still looks great.  Keep in mind, though, that with July 4th seasonality at gale force right now, an unmitigated collapse would be highly unusual.  On the other hand, if DaSleazeballs had had the ammo to short-squeeze stocks at any point yesterday, they'd have done it.  In fact, the broad averages barely got a bounce the entire day.