I noticed this too late to act on it Monday, but 28.87 was short-able, based on the pattern shown in the accompanying chart. (In practice we’d likely have missed the trade anyway, or opted out, since the actual high missed the target by three cents — and it occurred in the final moments of the session.) The Hidden Pivot can still be useful for purposes of analysis, since any progress above it today will be telegraphing more buying power to come.
COMMENTARY for Tuesday
Rick's Picks for Tuesday
With the possibility of full-scale war looming in the Middle East, geopolitical tensions have so far produced only a modest blip in energy prices. A weak follow-through today could be expected to yield a tradable top near 41.13, a Hidden Pivot midpoint, but any higher would be warning of a last-gasp feint to as high as 44.74. You can short that last number with a stop-loss as tight as 22 cents, but you’ll be on your own thereafter. Note to night owls: a pivot at 38.05 offers a decent chance for bottom-fishing, but it would be invalidated by a print above 40.39. _______ UPDATE: The Hidden Pivot at 38.05 caught the low nicely, and you could have bottom-fished there with a stop-loss as tight as 13 cents (!), since the intraday bottom was at 37.93. The subsequent bounce was strong, peaking at 39.90. This means you could have made as much as $2,000 per contract in just under two-and-a-half hours.
No change. Over the near-term, the number to beat — a Hidden Pivot resistance, as well as our minimum upside target — is 901.00. However, a decisive move above it would be strong evidence that the futures are capable of leaping to at least 972.20. In Monday night action, gold futures were so strong that even the one-minute chart was not yielding any buying opportunities on a-b-c retracements.
Seasonality will be operating at nearly full-strength today, but I wouldn’t expect much of a rally. Look at the accompanying chart and you can see how every surge since early October has lacked follow-through. In fact, there has not been a single burst that exceeded two prior peaks — a clear warning that the Santa effect is suffering from the equivalent of typhus. For today, I have no great upside targets to offer, but the one well below these levels at 827.25 will remain valid until such time as 878.00 is exceeded to the upside. If that happens you could use 895.75 as a minimum upside objective, but it’s not worth more than two ticks’ risk if you choose to go short there.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
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Café Ruminations
by Rick Ackerman on December 30, 2008 11:20 am GMT
I’m seated in the corner of a Boulder café, ruminating on the day’s events, including a trade in the E-Mini S&P that we missed by a hair. The bid I’d suggested was intended to leverage a fat-and-juicy Hidden Pivot support at 852.75, but the actual low occurred two ticks above it, at 853.25. The subsequent rally trampolined 19 points, raising the question of whether we got front-run on our own advice. It’s possible, at least, since the target had been up on the Touts “billboard,” so to speak, for a few days. I may be able to avoid having my targets “stolen” by posting them in the chat room right before they get hit. Regardless, it would appear that drum-rolling them a day or two in advance risks undercutting the kind of delicately precise intelligence with which I try to equip subscribers.
The target itself was mildly important to the short-term picture, since the E-Mini’s apparent reluctance to pull back to it hinted of strength, or at least of a temporary shortfall in selling power, in the waning days of 2008. Seasonality will be powerfully on the side of bulls until next Monday, but if yesterday’s bounce from a subterranean Hidden Pivot was the best that bulls can muster, then come January, look out below! Not that our expectations for a Santa rally should have been any higher than, say, Macy’s.
Zip Code Man
Funny story: I bumped into a guy at the café named David Raifsdeitcher, an accomplished busker who is better known in Boulder as the Zip Code Man. In his act on Pearl Street, he gathers fifty or so people within a chain-link outline of the U.S. map. He first asks what your zip code is, and when you respond, say, 08406, he places you in the approximate location of Ventnor, New Jersey. Then, one person at a time, he recalls where each is from and also names some bar or restaurant that he supposedly visited in that town. His prodigious memory notwithstanding, every time I bump into David I have to re-introduce myself because he can never remember my name. Side note: The Zip Code Man is quite a juggler and can get seven objects into the air without breaking a sweat.