Is the economy recovering? Nowhere is there more confusion on this topic than in the pages of the Wall Street Journal. Anyone scanning just the headlines might think we’re on the cusp of a solid rebound: retail sales are up, home sales are starting to move, and the Fed chairman thinks the worst is behind us. It is only when one burrows into the newspaper, particularly the op-ed pages, that a more sobering picture emerges. The facts well behind » Read the full article
In after-hours trading, the futures appeared to be struggling to reach the 1062.75 midpoint of a minor corrective pattern projecting as low as 1056.50. Either of these Hidden Pivots can be bottom-fished with a stop-loss as tight as 1.00 point, but if the trend reverses Thursday night or Friday morning, hitting 1070.00 before 1063.75, bears had better get out of the way. My immediate target thereupon would be 1073.00, but with a good shot at 1085.00 if it’s exceeded by more than 1.00 point. [Note: The interpolated over/under numbers for the December contract are, respectively, 1065.25 and 1059.00.] ______ UPDATE (10:14 a.m.): The futures have rallied from an overnight low the fell in-between the two levels of corrections targets given above. The move was impulsive, so that the pullback now in progress must be viewed as such rather than as the start of a significant downtrend. It would take a 1047.50 print to reverse bulls on the hourly chart.
The futures look pretty neutral right now. Notice in the chart how yesterday’s downtrend played out to within a single tick of a crystal-clear target on the 3-minute chart. Now, if the recovery rally hits or exceeds its target, bulls would be back in charge. _______ UPDATE (10:22 a.m.): Gold’s rally stalled a single tick above the 1019.40 target shown in the chart, and although I had said this would put bulls back in charge, I jumped the gun. In fact, Gold needed to have exceeded the Hidden Pivot — exceeded it by more than a single tick, anyway — to suggest there’s enough buying enthusiasm to take the futures to a new threshold.
Apple’s “story” has dimmed slightly with the recent announcement of dramatic price cuts for the firm’s high-capacity iPods. The news would probably be easily absorbed if the stock were trading at half its current price, but the rally in fact has looked like it needed a rest for the last 50 points. Accordingly, we’ll use a Hidden Pivot target not far above, at 193.87, to try and get short. We’ll have a better idea of whether the stock will actually reach that number once we’ve seen how far it pulls back from yesterday’s high. Anything exceeding 182.82 would indicate possible trouble. _______ UPDATE: 188.90 is as high as buyers could muster on the last rally peak. The target is still valid in theory, but we’ll put this trade aside for now, since it can only distract.
We don’t pay much attention to this vehicle other than at key turning points, but the short-term pattern shown looks like a lay-up for traders who see futures contracts as no more than bouncing dots on a chart, waiting to be exploited. There are actually two trade possibilities here: 1) a ‘camouflage’ short as USM slips below the 132^13 midpoint; 2) and a very tightly stopped long from within a tick or two of the 131^17 target. Good luck! Please report any fills in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (3:17 p.m. ET): The short was tricky to initiate, but once aboard, your reward came quickly with a drop to a so-far low at 131^26. As noted above, the short should be covered and reversed near 131^17. ______ UPDATE (April 6, 3:57 p.m.): The low of Friday’s violent price swings was 131^21 — not quite close enough to have gotten you long easily. Although this could prove to be an important low for the short- to intermediate term, under the circumstances I’ll assume no subscribers were filled. _______ UPDATE (April 11, 1:03 a.m.): Next important stop on the way higher: 135^17.
A heads-up: TBT is approaching a bearish Hidden Pivot target at 43.39 that would offer a back-up-the-truck buying opportunity if it is reached. This would of course imply that the price of the underlying long bond is approaching an important top.