Tuesday, October 20, 2009

The futures are coming up on a 1.5131 Hidden Pivot target that looks like a high-odds spot for an important -- and presumably tradable -- top. Longs can use it to manage risk with a shrinking trailing stop, but it can also be shorted with a stop-loss as tight as you can handle.  Once the target has been closely approached (i.e., within 4-7 ticks), camouflage players should use the 3-minute chart to board the first abc downtrend. _____ UPDATE: The rally ran into granite at 1.5059, so we'll pull the short offer for now.

Having bettered a rally target on the daily chart yesterday, the December contract has become an odds-on bet to achieve the next, 150.85. That would represent a rally of about 5 percent from these levels.

The Gold Bugs Index signaled a rally to as high as 492.52 two weeks ago, but it seems content for the time being to lazily consolidate near that Hidden Pivot's sibling midpoint, 441.99. If you're looking for a camouflaged blastoff signal, I'd suggest using either of the two look-to-the-left peaks shown on the accompanying 3-minute chart.

The futures have been working on a bullish, 125^12 target for five weeks, at least in theory, but they can't afford to back pedal much more without turning the daily chart moderately negative.  A print down to 117^17 is where trouble would begin, but a bit lower, hitting 116^29, would put bulls on the defensive.

The Dollar Index seems all but ordained to bounce from within the range 74.97 - 75.04, so currency traders and greenback aficionados should take heed! If the index reverses to exceed 75.43 without first achieving 75.04, take it as a sign that bulls are about to romp for a few days and possibly longer.

Using a 100.51 stop-loss, we covered a round-lot short whose adjusted cost basis was 101.68. The trade would have produced a gain of about $117 for anyone who followed my instructions exactly.  The fact that the Diamonds got nowhere near their target on the correction suggests they are eager to run. Going forward, bulls should use a 101.82 target to manage risk on the way up, and bears can short there aggressively with a stop-loss as tight as they deem prudent.

Night owls can try bottom-fishing at 1093.25, stop 1092.75. That's the 'd' target of a very) minor correction off the after-hours high, 1096.50. If the futures find traction there and resume their giddy dance higher, use 1102.25 as a minimum short-term objective. _______ UDPATE (1:28 a.m.):  A print above 'C' (1095.50) invalidated our target, and therefore the buying strategy. The difficulty the futures are having so far tonight reaching minor correction targets is bullish.

The futures slightly bettered our 1065.00 rally target during the regular session, but they looked to be developing thrust for another leg up early Monday night. For targeting purposes the daily chart offers the most clarity, although the 1128.70 projection it yields seems a tad ambitious on so fleeting a correction. The HP midpont associated with that number is 1086.20, so let's make it our minimum upside objective for the near term. Perhaps your best bet for catching a ride north would be to buy the 'd' target of a corrective pattern. As you can see in the accompanying chart, Monday's low occurred within a few ticks of just such a target.

Apple is not so much a bellwether as a lone pillar supporting the idea that America, Inc. will have something to sell the world besides financial "products" when our economy eventually emerges from its near-death experience.   The $231 target that I hung out in today's commentary should be regarded as a minimum upside objective, with the implication that broad averages are unlikely to falter as long as one U.S. company continues to knock 'em dead. We'll have plenty of company if we try to ride the stock higher from these levels, so I'd suggest focusing "camouflage" strategies on the 5-minute chart or lower.