It’s almost official: the recession is maybe, probably, technically over. Helicopter Ben said so yesterday, and who are we to argue? You can hardly blame the guy for having his head in the clouds, considering how retail sales absolutely exploded in August. Sure, it was due almost entirely to a cash-for-clunkers program that taxpayers have yet to pay for. But the program will have been a bargain if it helps foster the impression Americans are in a spending mood again. And if that’s all it takes to get the economy rolling, then by all means, let’s extend clunker status to everything else in America that clunks, starting with Iron City’s peerless clunkmeisters, the Pittsburgh Pirates. We’ll personally chip in a TV set » Read the full article
If I were short right now, wearing the pain on my sleeve, I’d have grown so despairing as to create near-certitude in the minds of contrarians that a very nasty swoon is at hand. We should therefore pay close attention to any signs of trouble — meaning, for one, pullbacks that exceed their ‘D’ targets. While we’re at it, and because no signs of trouble have developed yet, let’s try bottom-fishing at the midpoint shown in the chart. The trade will of course be viable only if the downtrend plays out in a fashion similar to what I have drawn. (It doesn’t have to be exact, though, and ‘C’ could be higher than the one shown). My instructions are non-verbal, but the method you are to use will be accessible to all who have taken the Hidden Pivot course. I would encourage you to share your tactics with those in the chat room who may be less experienced. _______ UPDATE: We had the right idea, although the pattern shown in the chart missed the actual low by two ticks. That low occurred at 1046.00, but our bid would have been at 1045.50. The fact that a retracement abc was unable to get to its midpoint telegraphed the strength that unfolded on Wednesday. As a practical matter, the buy was subsequently signaled on the first bullish impulse leg that occurred after 1045.50 was missed on the pullback. This occurred on the opening, on a 1058.00 high.
Looks like a minimum 1022.00 from here, enroute to a bigger-picture target at 1074.00 that I have more or less promised. I won’t try to split hairs with chat-roomers who have been monitoring gold’s every heartbeat, every microtrend, but I will pitch in with whatever camouflage entry opportunities may crop up (as one did yesterday morning). There’s another in progress at this very moment (albeit with a caveat), as you can see in the accompanying chart. Notice how Tuesday’s high fell between the two labeled peaks to the left.
Bears found themselves trapped on the opening yesterday for the umpteenth time since the bull market began, setting up a short-covering panic that turned what began as natural weakness in the broad averages into steroid-powered strength. DaBoyz simply pulled their bids at the bell, allowing the relative smattering of market orders that had built up over the weekend to have an inordinate effect. Into a bid-less vacuum, stocks dove the equivalent of 120 Dow points, exhausting pent-up orders in about 45 minutes. Once sellers were spent, it was child’s play for the smart money to effortlessly squeeze the futures back up to where they had begun the day — plus a little. Moreover, since there was but a shallow correction from the end-of-day highs, bears remained tactically on the ropes at the close.
For our part, since subscribers could have gotten short from as high as 1984.25 based on a Hidden Pivot rally target disseminated last week, some may have elected to swing for the fences by staying short. However, although the trade could have produced a profit of as much as $1200 per contact, the possibility that we were getting the jump on the Mother of All Tops was never more than remote. If you still hold a position, please let me know in the chat room and I will furnish further guidance. Strictly speaking, a short would have survived yesterday’s nasty dipsy doodle if it had been tied to an impulse leg-based stop-loss on the hourly chart.
As GDXJ was working its way south from around $43, my bearish forecast called for a washout low at exactly 40.42, a Hidden Pivot support of great clarity. I’d suggested buying down there ‘aggressively’ and with an ‘absurdly’ tight stop-loss. This advice would have paid off handsomely for anyone who followed it, since the stock trampolined 64 cents yesterday off an actual low of 40.43, a penny from my target. Since a subscriber reported doing the trade as advised, I’m establishing a tracking position for the further guidance of all who may have gotten long. (He reported having bought 1000 shares off a 40.44 bid, but I’ll assume a more conservative 400 shares.) Accordingly, I’ll recommend exiting half the position on Friday’s opening if you haven’t done so already. We’ll impute any profits thereof to the cost basis of the 200 shares that will remain. _______ UPDATE (July 27, 9:48 p.m. ET): Exiting 200 shares on Friday’s 41.20 opening leaves us with a tracking position of 200 shares whose imputed cost basis is 39.66. Exit another 100 shares on today’s opening and tie the rest to an impulse leg-based stop-loss on the 15-minute chart. At the moment, that would imply bailing out on an uncorrected dive touching 41.73. ______ UPDATE (July 28, 11:46 a.m.): We got sleazed when DaBoyz opened the stock on the so-far low of the day, 42.40. The good news is that such shakedowns usually occur because the smart money is trying to buy the stock. In any event, I am tracking a 100-share position with an effective cost basis of 37.25. For the time being, let it run.
A subscriber reported success yesterday legging into the 1340/50/60 August 16 call butterfly that I’d advised. He did so 32 times at no cost, as suggested, but it took a $10 move in the stock between legs to get filled so advantageously. His maximum profit would be $32,000 with the stock trading at 1350 come August 16. Since he owns the position without cost, no loss is possible even if PCLN should all to zero or rally to $1000. We’ll do nothing further for now, but I’d suggest that those of you who were unable to buy the spread keep trying. We’ll shoot for a partial profit if the stock rallies $40-$50 in the next few weeks but otherwise do nothing further. I’ve reproduced a chart that shows why our expectation of a $120 rally from current levels, to a 1358.18 Hidden Pivot target, is not exactly farfetched. To that end, a pop above the 1270.59 midpoint pivot would be most encouraging. ______ UPDATE (July 28, 7:46 p.m. EDT): Yesterday another subscriber reported legging into ‘free’ butterfly spreads as suggested. Keep trying for at least one more day if you haven’t yet acquired a stake, since the spread will remain cheap as long as PCLN doesn’t blast off.
I haven’t tracked currencies that closely, but because they tend to move very precisely to Hidden Pivot targets, traders should consider exploiting them whenever possible. Notice how EUR/USD has broken beneath a midpoint Hidden Pivot at 1.34841 after noodling around near that pivot for a few hours on Thursday. This suggests that it is bound for D=1.34197, at least. You can bottom-fish there with a stop-loss as tight as 3-4 ticks. Notice as well that there are two slightly higher possibilities for point ‘A’. The correction targets they yield lie, respectively, at 1.34114 and, worst case, 1.33992. I expect these numbers to work very precisely, so use them in whatever way suits you best. Note as well that a last-gasp rally to p=1.34738 after EUR/USD has fallen a bit would be short-able. _______ UPDATE (July 24, 5:35 p.m. EDT): Yesterday’s short-squeeze feint topped precisely at a midpoint Hidden Pivot (see inset, a new chart) that was originally support but which is now resistance. This price action confirms the pattern we’ve chosen as well as its ‘D’ target at 1.34197. At least one subscriber has confirmed getting short in the chat room. _______ UPDATE (July 27, 10:43 p.m.): Friday’s low occurred at 1.34206 — 0.00009 above our 1.34197 target. Shorts should have covered there, but if you were able to bottom-fish the low and catch a piece of the 144-tick rally that ensued, please let me know in the chat room and so that I can establish a tracking position for your further guidance.
Let me reiterate that, with Goldman presumably bound for at least 192.91, any pullback that lines up with Hidden Pivots is a speculative buy. Yesterday, for instance, I’d flagged a major midpoint support at 175.05 where you might have considered doing so. However, the actual low of a nasty swoon on the opening was 175.46. Although, with Goldman in such a strong uptrend, we should expect pullbacks to fall shy of their targets, we can still catch the turns — and trade them — using camouflage. Our edge yesterday lay in “knowing” that the correction would reverse from within spitting distance of the midpoint pivot.