Wednesday, June 2, 2010

As of around 3:30 a.m. EDT, there was precious little evidence of sentiment at play in the markets.  The E-Mini S&Ps were up a technically insignificant six points, August Gold was off $2.20, and one might have thought the very Cosmos were passing through the eye of the storm.  Is this perhaps the threefold peace that surpasseth all understanding?

Discussing the flotilla episode tonight with a friend who puts out his own market letter, he asserted that the force of events these days has completely overshadowed the markets. I agree, and so no matter what I am forecasting for a given day, you should understand that it is all within the context of  securities markets that in recent months have done little more than screw the pooch perhaps 95 percent of the time.  That said, let me note nonetheless that the E-Mini futures should be presumed capable of  1093.00 if they launch overnight without having breached 1067.25, the low as of around 12:20 a.m. EDT.  Looking at a bigger picture, the 1022.75 downside target first broached here eons ago is still valid in theory, but one cannot help noticing that the futures are having a devil of a time correcting down to that threshold.  I'm tempted to assume a bullish bias for the next few days as a result, but one also cannot ignore the fact that the imbeciles charged with deploying OPM have been somewhat restrained in their enthusiasm for buying, given fresh evidence each day that the whole bloody friggin' world is indeed falling apart.

As noted here earlier, a fairly important Hidden Pivot resistance at 20.170 looms as our minimum upside target for the moment, but an 18.795 midpoint resistance will need to be overcome first. Night owls can try bottom-fishing at 18.325, a tick above the Hidden Pivot support shown in the chart. A three-tick stop-loss is advised. ______ UPDATE:  We were stopped out for small change when the futures fell overnight to  a low at 18.090.  That's two cents from the target of a correction pattern that wasn't fully formed until around 5:30 a.m. EDT, but it would have been tough to bottom-fish in any case, since the low was just above the target. In retrospect, only camouflage would have worked, and even that was no picnic.

The 1236.20 target flagged here yesterday is still the best short-term rally target we've got, although some more-ambitious Hidden Pivots also broached here recently will be in play just as soon as buyers turn serious, as they predictably will. Let me mention that last night's bottom-fishing recommendation was at a Hidden Pivot midpoint, and camouflage entry was specified.  This meant, essentially, buying with the trend rather than trying to catch a falling spear, and it would have entailed waiting for a trendwise 'X' entry point on the lesser charts after 1220 was reached on the pullback.  Posting in another chat room, someone -- a Rick's Picks subscriber, apparently --  took me to task for the "complexity" of this strategy and for generally elevating the level of complexity of my touts. There is some truth to this, but I have done so because there  are now many hundreds of subscribers who  have completed the Hidden Pivot course and who can handle a little complexity -- not to mention, explain mildly challenging strategies to less experienced traders in the chat room.  I am grateful that a spirit of helpfulness pervades the room to make this possible, but it was through design rather than accident that this is so. In any event, I will continue to put out an occasional trade -- a Pick of the Day -- that even the greenest novice can execute easily, usually with a limit-order entry. The goal of these trades is to make Rick's Picks pay for itself, for all subscribers.  When vetting a Pick of the Day, I look for trades that are as close to the sure thing as can be found, at least by me, so if your opportunity hasn't arrived yet, please be patient:  I want the experience of winning to be as pleasant and stress-free for you as possible. (See also: my recent gold coverage)

British Petroleum’s shares have shed 40 percent of their value in the last six weeks, falling from $61 to a low yesterday of $36, but if sellers keep up the pace for just a few more days, the company could be trading at salvage prices by next week. Despairing news from the Gulf of Mexico over the holiday weekend set up the avalanche of selling that buried BP stock when it began to trade Tuesday morning.  Last Friday, the world had been transfixed by live images from the seabed that showed oil continuing to gush out-of-control from the broken well despite BP’s efforts to plug it with a “top kill.” We now know that that mud sealant that was injected into the drill hole didn’t build up the necessary pressure to resist the gusher because the wellbore itself was ruptured.  For all the good it did, the 1.2 million gallons of mud forced into the wellbore by a 30,000-horsepower piston might as well have been discharged directly into the sea. British Petroleum is facing criminal and civil charges as a result of the disaster, and it’s possible the company will not even be around in a year or two other than to pay claims.  Although the world will undoubtedly get along just fine if that happens, the loss of Louisiana’s wetlands and the catastrophic damage to the Gulf ecosystem will not be so easy to bear. An estimated 20 million gallons of crude have poured into the Gulf so far, but that number could go much higher if the leakage continues until August, when it is expected that a second and third well will be operating to take the pressure off the existing well. Alaska, 21 Years Later In the meantime, environmental reports from Louisiana have been heartbreaking. The slick has