ESZ11

We should brace for more upside, since minor-thrust peaks yesterday routinely exceeded their targets, if not by much. There's also the not inconsequential push at day's end past 1190.00, a visibly distinctive high recorded on September 27 that presumably would have been more trouble  if this short-squeeze rally were lacking in gumption.  Most immediately, as of around 12:30 a.m., the futures were working on a short-term target at 1201.00 whose coordinates are shown in the chart.  We should infer more strength if it's easily exceeded, but leveraging it, even via camouflage, could prove tricky because of the two imposing peaks near 1214 that were created in mid-September.

Take a look at two months' worth of gratuitous violence on the hourly chart if you think it's going to be easy to predict when stocks will lurch, presumably with even more violence, from their agonizing holding pattern. I can say no more right now than that Friday's price action created a bullish impulse leg that could produce a follow-through to as high as 1189.50 before this short squeeze runs out of fuel.  It's not quite an even-odds bet yet, though, since the presumptive C-D leg has thus far fallen a few points shy of the 1167.25 midpoint resistance (A=1129.50 on 10/6, and B=1173.75).  In any event, the target will remain valid until such time as the point 'C' low of the pattern that produced it, 1144.75, is breached to the downside.

The rally peaked a single point above our 1153.75 target, then pushed up to a nominal new high after noodling around for most of the day. Short-squeeze dynamics obviously still obtain, but I'm not going to try to predict how all of the wicked crosscurrents in motion now are likely to play out on a Friday, when slapstick traditionally reigns. The pattern shown in the chart is far more elongated than those I tend to like, but I am proffering it anyway on the strength of the sibling resmblance between k-A and the b-c correction.  It yields an 1168.00 target, but I'll leave it to your daring, cunning and imagination to find a way to make hay with that number.

The rally was blithely on its way to 1153.75, a Hidden Pivot, when the bell rang ending Wednesday's regular session. The pattern yielding that target, along with an 1130.25 midpoint resistance, is shown in the chart. As you can see, buyers had little trouble chomping through the midpoint, and so far this evening a presumptive consolidation has not even come down to it. Night owls might want to notice that the last seven bars yield a potentially tradable pattern -- an uptrending ABC that has yet to put in a true 'C'.  An entry at 'X' would entail too much risk, but you may be able to find a small pattern if and when the still undetermined 'X' of the pattern shown materializes. Looking at a bigger picture, any rally would start to look interesting with a print at 1204.00, a tick above a peak recorded September 21 on the way down.  The peak is most unlikely to be reached within a day or two, even on a strong rally, but you should keep it in mind as an important bullish trigger threshold.

The buzz concerning yesterday's vicious short-squeeze in the final hour was that Europe had finally gotten its act together, but the initially exuberant response to this by-now weekly hallucination was nowhere in evidence Tuesday night. Even so, shorts were caught in the ringer at the bell, and the dirtballs who had promoted the rally by pulling their offers were not easing their grip.  In fact, the retracement from yesterday's end-of-day peak was not even sufficient to bring the futures into a window where we might consider them properly recharged for a follow-through rally. That would require a print down at 1104.25 or lower, versus an actual low so far tonight of 1107.50.  There are no compelling opportunities that I can discern at the moment, but night owls should monitor the pattern flagged in the chart, since, if it plays out according to our rules, a time-limited buy-stop entry at 'X' may be possible. 

An aging target at 1077.50 remains my minimum downside objective for the moment, but if you attempt bottom-fishing there you should use "camouflage," since this number is merely the most appealing of several possibilities where we might look for a tradable bullish turn. Please note that if this Hidden Pivot support should get blitzed, that another, more important one at 954.00 drum-rolled here earlier will be very much in play. That said, the bounce from 1077.50 has the potential to be quite powerful, so it will be worth your while to try to get on board down there.  ______  UPDATE (11:19 a.m. EDT): The futures popped for 10 points overnight off a 1077.75 low, generating a nominally tradable 'camo' pattern on the one-minute chart (A=1077.75 at 4 a.m., B=1081.75 at 4:09 a.m., and single-bar C at 4:14 a.m). It would have produced a small profit, but the futures eventually relapsed down to 1068 overnight. To have exceeded such a longstanding target so quickly is ostensibly bearish, but the so-far 22-point short-squeeze recovery must be respected.  Are we perhaps seeing the initial surge of a massive rally that awaits an announcement by Chris Christie that he is running for president? If he does, he will trounce Obama (or Hillary?), and that would be as bullish an event as America has experienced in a long while. Regarding the futures, most immediately, a five-minute chart is needed to project an 1100.25 minimum rally. This is an odds-on bet because the target's sibling midpoint at 1091.75 has already been exceeded by 1.25 points.

Because there are so many downtrending ABC patterns from which we can derive targets, I've emphasized one that generated a relatively large bounce from within a tick of its 'p' midpoint, 1133.75.  The bearish D target that corresponds to that number lies at 1077.50, and so that Hidden Pivot would become our minimum downside objective if the futures were to close beneath the higher number or exceed it intraday by more than a point or so.  More immediately, the futures are down 8.25 points and bears should therefore beware, since the dirtballs who control this game are notorious for fading the dumb money on Sunday nights.

The futures are currently trading around the exact middle of the distribution zone formed by the wild price swings of the last six weeks. As such, there are no especially appealing swing trades in the offing, only whatever scalp-worthy opportunities can be extracted from the very lesser charts. Most immediately, that implies night owls can look for a turn from the 1140.00 midpoint support shown in the chart. If it doesn't come, however, the next logical spot for initiating a long position (via camouflage, hook, or crook)  would be at 1130.50.  A bigger picture suggests that the futures will want to come down to the 1088.75 midpoint of the ABC downtrend begun from July 22's  1341.75 high.  Want to learn how to nail swing highs and lows precisely, and to manage trade risk yourself? Click here for information about the upcoming Hidden Pivot Webinar on October 5-6 and a $50 discount.

Yesterday's fab short-squeeze rally was about what we might have expected, considering that Greece supposedly was finally about to go under, and that the redoubtable Art Cashin was kind of expecting a crash.  Bearish expectations are all the market has going for it at this point, so we may as well sit back and let the bad times roll.  Most immediately, that will mean ignoring this vehicle for the moment, since it ended the day with a fourth-rate cliffhanger in the form of a rally that failed by a tick to exceed the look-to-the-left peak shown in the chart. My bias for the very short-term is bullish nonetheless, but I'll leave it to camouflageurs to make hay.