The chart shows the tortured psyche of a bear market in its infancy. There have been no particularly memorable downdrafts yet, just a paltry three-percenter in the Dow last week that was overshadowed by an even more-deserved sell-off in the lunatic sector. There is only discouragement and anxiety at this point, but no real fear. And why should there be? If Thursday’s psychotic, Fed-induced short-squeeze had continued for just one more day, it would have brought the S&Ps to within betting distance of new record highs (!). As things stand, it scared the bejeezus out of traders who’d grown too comfortable shorting into every rally that occurred in April. For trading purposes, continue to use the 3994.75 target as a logical place for a tradeable low. It has grown too well exposed by now to work precisely for bottom-fishing, but price action there will at least give us a firm handle on the downtrend’s strength at this very early stage of the bear. _______ UPDATE (May 9, 5:26 p.m. EDT): The futures dove to the 3994.75 target this morning, then spent the rest of the day screwing around with it. The close was beneath this Hidden Pivot support, however, following a 3970 low that represented more than just a slight breach. Accordingly, I’ve shifted point ‘A’ up to the marquee high to produce a still lower target at 3921.75. That will be the end of the line for the bear cycle begun from 4800 on January 4, so look for a long, sustained bounce after 3921.75 is touched or very closely approached. (The bounce may already have begun, but I doubt it. ) D=3921.75 can be bottom-fished with a ‘camo’ set-up, since it is extremely unlikely to be significantly exceeded the first time it’s hit. Here’s the chart. _______ UPDATE (May 11, 10:25 p.m.): Dave Isham corrected my target to 3925.25, meaning today’s low at 3920.25 occurred 0.1% below it. The feeble bounce so far is not encouraging. _______ UPDATE (May 12, 8:48 a.m.): Check my Trading Room post for a chart with a new target. _______ UPDATE (May 12, 9:52 p.m.): The futures have bounced 110 points from a low at 3855.00 that fell just five points from the target I posted (with chart) in the chat room before the opening. The rally is not yet impulsive on the hourly chart but would become so with a print at 3986.00.
ESM22 – June E-Mini S&Ps (Last:3955.00)
