ESZ11

The 1256.50 rally target given here yesterday remains valid as a minimum objective, but any higher and we'd probably be looking at 1271.50, at least. I'd rate the higher number a less risky short, and so I'll officially recommend doing so with a 1271.25 offer and a 1272.25 stop, one contract.  If you are schooled in the "camouflage" arts, however, I'll suggest getting long from here to 1271.25; and then reversing the position via a four-contract short from near 1271.50. If the expected top occurs during market hours, check back here, since I may update with a specific, detailed strategy in real time.  Want to learn how to nail swing highs and lows precisely, and to manage trade risk with a simple approach? Click here for information about the upcoming Hidden Pivot Webinar on November 16-17 and a $50 discount.

We're still using a rally target at 1256.50 that was given here previously, since last week's rollercoaster ride never dipped beneath its 1185.25 point 'C' low. If the target were to be exceeded on a closing basis or by more than 1.50 points intraday, that would portend more upside over the near term to at least 1271.50, the Hidden Pivot target of a somewhat larger pattern. Night owls looking for a way to board will probably have to drill down to the 1-minute chart to come up with 'camouflage,' since price action is nervously trendless at the moment.

The recovery in the second half of yesterday's session stalled at the 1214.50 midpoint resistance of the pattern shown, but if it gives way, look for a follow-through to at least 1236.00, its 'D' sibling. Since Euro-angst remained unmitigated yesterday afternoon, we should probably allow for a negative outcome as well. If it comes, the first place we might look for a turn would be around 1180.75.  That's a Hidden Pivot support, but I don't recommend using it for bottom-fishing (other than via camouflage), since it coincides with some structural supports created last week. _______ UPDATE (12:18 p.m. EDT):  A powerful rally sent the futures soaring 25 points today -- to a 1235.75 high just a single tick from the target I'd proffered. I hadn't explicitly advised a short there, but I hope you were able to make some hay either coming or going.

We took a close look at this vehicle during yesterday's tutorial session, applying 20-20 hindsight to the task of uncovering a trading opportunity, any trading opportunity. Just such a one materialized in the wee hours Tuesday, shortly after the futures bottomed to initiate the buying spree that was to occur later in the day. But even in retrospect, the optimal entry point was not easy to find, nor did the first such opportunity produce the effortless cruise to Tuesday's top that we would have been seeking.  We'll use the magnifying glass again during Thursday's Hidden Pivot demo at 9 a.m. EDT (click here to reserve a front row seat), but I'd be lying if I said there's a trade you can try Wednesday night that is guaranteed to drop easy money into your lap.

Bears shouldn't get their hopes too high, since the December contract is still under the sway of a bullish impulse leg created Sunday night, just before stocks went into yet another apparently meaningless swoon.  It didn't take out the point 'C' low of a pattern that projects to 1256.50, although the graphical picture was rendered visually unappealing by the large trough formation of the last two days.  Night owls should look elsewhere for easy opportunities, since there were no subtle footholds here as of around 10:35 p.m. EDT.

I didn't fall in love with the bullish pattern in yesterday's chart for no good reason, since it has always worked. Not this time, though, and although it would be no stretch for me to infer that the market has caught a whiff of something scary out there, I'm going to let my instincts be guided entirely by the simple action of impulse legs on the hourly chart. This is notwithstanding my gut feeling that They cannot pull the plug as long as the Merkel-Sarkozy supposed plan awaits explanation and headline treatment. Concerning impulse legs, yesterday's plunge did not actually alter the 1256.50 target, since its 1185.25 point 'C' was not breached.  It likely will be today, though, and if so, we can use the 1176.75 low from October 10 as a tripwire to warn of a pick-up in the tempo  of the selling. Whatever happens, it is the c-d down-leg that follows this presumptive impulse leg that will perforce yield the most useful infomation. If the rally has a second thrust in it, we should see that follow-through reverse from no lower than its 'd' target.  More bullish still would be a reversal from its 'p' or above.  I've sketched this hypothetically so you can see it in pictorial form.

So, now we know exactly where the futures are headed on the next thrust: 1256.50.  This target is trail's end for the pattern shown, which leaps to the eye in the somewhat scrunched-up hourly chart reproduced alongside. I am displaying it in a different aspect than usual because it somehow looks more compelling in compression than when unfurled.  I was not surprised to discover that the high of Friday's lunatic lunge fell just two ticks from the 1221.00 midpoint sibling of the target -- yet another reason why we should be absolutely confident about the destination of this rally if and when it pushes above the midpoint. It can serve as our minimum upside projection at that point, and so our trading bias should be aggressively bullish, since upside potential would be worth nearly $1800 per contract if my assumptions prove correct.  Camouflageurs looking for a way to get long should notice that there's a 1.75-point gap between the 1222.00 peak recorded on September 1 and the "conventional" breakout peak at 1223.75 hit a day earlier.  A small -- and presumably fleeting -- pullback from somewhere between the two could set up a perfect buying opportunity.  ______ UPDATE (2:59 p.m. EDT):  Rich Cash at Big4 says he went short before today's plunge.  In the forum, I responded as follows:  "Nicely timed, I'd say -- especially considering yours truly began the new week complacent that my next bullish target  would be reached more or less routinely.  My savvy friend Doug at UBS thinks the serious selloff we've all been expecting has in fact begun today, and that the momentous Merkel-Sarkozy announcement in early November will not hold the furies in abeyance. His bearish take is based on Bob Farrell's rule about what happens when all of the experts get on the same side of the trade.  In this

The prospect of finding a 'camouflage' entry for the next leg up remains intact, since the bullish pattern that I flagged on the daily chart yesterday is continuing to correct in b-c fashion. While we should always be open-minded enough to allow for the somewhat unexpected 3000-point collapse in the Dow, my gut feeling is that the broad averages are headed higher over the next few weeks, especially since October is "always" the month when stocks get nuked, if they do.  One further contrarian possibility we should be willing to entertain is that the rally is not yet ready to correct, and that the AB impulse leg launched from 1068 two weeks ago will surpass yet one more "external" peak before DaBoyz allow bears to carry the dead and wounded from the battlefield. The external peak I am referring to is the 1223.75 high recorded on August 31 (see inset), and if it is exceeded from here with no intervening b-c correction on the daily chart, we might well infer that the Christmas Rally has already begun.  Want to learn how to nail swing highs and lows precisely, and to manage trade risk with a simple approach? Click here for information about the upcoming Hidden Pivot Webinar on November 16-17 and a $50 discount.

The peak of yesterday's rally exceeded mid-September's 1214.50 highs by a point-and-a-half, transforming the steep rally of the last two weeks into a bullish impulse leg.  On the daily chart, this is the most bullish event since August 29, when a lesser upthrust similarly "went impulsive."  That rally fizzled a couple of days later when it entered a tiresome, month-long dirge, but it's too early to predict whether this one will fare any better.  However, because it missed breaching 1223.75, a top made on August 31 that is still the highest high achieved since the broad averages bottomed three weeks earlier, there may be a camouflage opportunity to get long in the offing.  I've sketched this out hypothetically so that you can play along if you've got the patience for it.  Want to learn how to nail swing highs and lows precisely, and to manage trade risk with a simple approach? Click here for information about the upcoming Hidden Pivot Webinar on November 16-17 and a $50 discount.