ESZ11

A 1305.25 rally target remains our lodestar, but a more immediate concern is the 1278.25 target of the lesser pattern shown.  If it is approached, or better yet exceeded by just one tick, that could set up an excellent long-entry opportunity for a ride into the wild blue yonder.  Notice the tiny, look-to-the-left peaks just above and below the target, including one at 1278.25.  The pullback following any impulse leg exceeding those peaks could possess the subtlety we need to catch a nearly riskless ride to the higher target at 1305.25.

The 1305.25 target proffered here on Friday is still my minimum upside objective for the near term. Since that implies plenty of upside potential, I'll suggest that night owls attempt to leverage it with a tightly stopped bid at the 1241.00 midpoint support shown. If the futures should head higher straightaway, reaching the 1256.00 target of a lesser uptrend in progress when the music stopped on Friday, camouflageurs can use the small peak at 1254.25 recorded on Friday for a subtle way in. It can be found on the 3-minute chart at 8:48 a.m. Eastern Time. _______ UPDATE (10:42 a.m. EST): The futures topped precisely at th 1256.00 target noted above and are now on their way down to the 1242.25 midpoint support of the new pattern.  Amidst today's muddled, pointless tedium, you can try bottom-fishing there either using camouflage or a bid with a three-tick stop-loss.

By reversing without having achieved a downside target at 1201.25, the futures are hinting that bears should not try to impede this rally too aggressively. We can always short it fearlessly using camouflage, of course, and even come away with a profit if we're wrong. But it will probably be easier to go with the bullish flow for now, for the reasons stated above.  Most immediately, that would imply leveraging the 1305.25 target of the pattern shown.  The futures have already slightly exceeded its 'p' sibling at 1257.00, so the rally looks like a 'go'.

The futures have been down as much as 17 point tonight, but it could take another 15 points to exhaust sellers if a midpoint support at 1201.25 is fated to come into play. We'll make that our minimum downside target for the near term, but you can also try bottom-fishing there with a camouflage strategy if you're keen on optimizing your odds.  The 'd' sibling of this support lies at 1163.75, so a breach on a closing basis would have quite negative implications for the near term.

Stocks have impulsed to below last week's blastoff point, but again we are in limbo with unconfirmed patterns pointing both ways.  If the market keeps moving higher, as it has been doing cautiously since the Tuesday low, a key level to watch will be 1264.00.  That's where a large bullish pattern would be activated whose first target (the midpoint) would be at 1319.00.  The pricetag on its sibling "D" target is not fit to print, and since it is unconfirmed, we'll demur.  If the market rallies somewhat less than that and then turns back down, we'll get some clear bearish targets based on this week's impulsive decline.  (Posted by Doug "harry" McLagan)

The current pullback in S&P futures appears as likely to give us upside targets as it is to morph into a bearish impulse wave.  Yesterday we were looking for at least a 30% retracement of last week's strong up-move, and we got more than we asked for.  With nearly 70% of the gains given back, the current low of 1238.75 will probably have to hold if we're going to get actionable bullish targets out of this pattern, which would be confirmed by a print at 1257.00.  A further decline to below 1216.50 would yield a bearish impulse wave for which there is a ready-made one-off "A", as depicted in the attachment.  The decline accelerated around 2:00pm yesterday, and thus far it hasn't given us any structure to work with.  (Posted by Doug "harry" McLagan)

Equity markets remain in bullish impulse mode, despite drifting lower since Thursday afternoon's high.  If we apply a rule of thumb which requires a 30% retracement before we start taking a BC leg seriously, a further decline to 1267.25 would give us something to work with, as is shown on the attached chart.  The bigger move up from 1068.00 on October 4 has pulled back by almost 28%, but because this has not resulted in a strong ABCD picture, we'd be skeptical toward a "D" target trade.  Watch for a smaller pattern to emerge based on last week's impulsive move up from 1216.50.  (Posted by Doug "harry" McLagan)

Thursday's powerful rally in equities left our active patterns in the dust, and a new one that emerged after the day's high is under threat as the futures drift lower in night trading.  The bull trend which launched off of the October 4 low still lacks "structure" in that the pullbacks along the way are too small to serve us as BC legs.  In other words, the S&P500 is still impulsing upward 210 points later.  This move will become serious business if and when it gets past the highs of early and mid-2011, less than 100 points further up.  The small pattern that emerged yesterday targets 1303.00.  Its midpoint is half a point below "B" (the rally high) and therefore not well hidden.  Traders shorting 1303.00 should use a very tight pair of orders.  If the "C" point at 1274.50 is touched or surpassed, the pattern will be voided.  This is shown in the attached chart, which also illustrates why we all should have made a killing yesterday.  (Posted by Doug "harry" McLagan)

News out of the Eurozone has propelled S&P futures upward and through a midpoint pivot whose sibling "D" target of 1278.50 is now in play.  The stock-market rally of early October cancelled the pattern whose impulse wave was the memorable midsummer plunge, and the relentlessness of the recovery meant that it lacked the kind of structure that hidden pivotry thrives on.  But the up-and-down trading of the last two weeks has made the ES charts interesting to us once again.  The 1278.50 "D" target comes from a small but elegant pattern that formed in the recent volatility.  A larger bullish impulse wave began at the October 4 low (it didn't pause long enough to give us a one-off A).  But all impulse waves must come to an end, and where better to do so than at 1278.50?  Traders can short that well-hidden pivot at 1277.75 or perhaps a tick or two higher, with a stop not below 1279.25.  (Posted by Doug "harry" McLagan) _______ UPDATE (2:00pm EDT): The futures spent half an hour deciding whether to reverse at 1278.50 and finally chose to push higher.