October 2010

Someone touted this stock in the chat room yesterday and, truth to tell, it doesn't look too bad. The company provides Chinese and Japanese language Internet search services.  The nearest Hidden Pivot resistance lies at 126.27, and I'd rate it a 90% shot of being reached within the next 2-3 weeks, if not sooner. What all but clinches the strongly bullish outlook is the way the stock blew through a clear-as-day midpoint resistance earlier in the week. ________ UPDATE (Monday, November 1, 3:11 p.m. EDT):  Four days after this tout was published, BIDU has eased to a so-far low of 107.58. If this is just a garden variety correction of a still-strong bull, however, the stock should turn from 107.02. Anyone interested in acquiring the stock for speculative purposes should bid just above that pivot, risking, oh, 15 cents, on the stop.  Officially, we'll be bidding 107.04 for 200 shares, stop 106.89). _______ FURTHER UPDATE (4:51 p.m. EDT):  We lost $30 testing the water. The stock's low at 106.85 overshot the midpoint target by 17 cents, implying BIDU will now head down to the related 'd' target at 104.88. We'll try again, bidding 104.93 for 200 shares, stop 104.63.  Unofficially, however, you could start looking for a camouflage entry opportunity if BIDU gets down to 105.40, since there's always a chance that the correction of a strong bull trend will end without having quite reached the 'd' target of an abcd retracement. _______ FURTHER UPDATE (Tuesday, Nov 2):  The low at 106.85 proved to be the launching pad for a so-far $3 rally, so we had no horse in the race. At least one chat-roomer reported sticking with the trade, however, after having used a wider stop-loss than I'd advised. 

The Gold Bugs Index will have a chance to create a potent impulse leg on the hourly chart today with relatively little exertion, since it would require a rally of just nine points to surpass the "external" peak labeled in the chart.  Still better would be a close above 520.61, a Hidden Pivot midpoint tied to a 'D' target at 550.85.

Bulls face a minor Hidden Pivot resistance at 24.060 just above Thursday's high, but once above it the futures would become an odds-on bet to reach a minimum 24.290.  Shortly before 10 p.m. EDT, a lengthy consolidation pattern was generating few abcd correction patterns that were reaching their 'd' targets, adding weight to the bullish case for the near term.

Most of yesterday's gains were compressed into a few minutes, so it was easy to miss the train. Now, the lesser charts point moderately higher, into the mid-1350s, but the hourly chart suggests that more corrective action may be needed to set up the next thrust. Bearish targets at 1291 and 1278 remain valid in theory, but we'll go with the uptrend until such time as it flames out.  1359.00 is still the number to beat.

The futures are breaking down in a minor and uninteresting way at the moment, dropping out of a narrow sideways scuddle that began just after the bell. There are two pairs of targets: one of them with a 'p' midpoint at 1176.75 that is precisely where the futures are trading right now, and an 1171.25 point 'd';  and another with 1175.75 and 1169.25, respectively as points 'p' and 'd'.  A glut of small opportunities, you could say, but the most conservative of them would be to bottom-fish that last number with a three-tick stop-loss.  If you'd rather play for a bounce at the midpoints, camouflage tactics are advised.

(We're airing this commentary for a second day because it stimulated such a lively discussion in the forum. Indeed, some of the responses could have run as commentaries by themselves. RA) We weren’t really trying to defend Helicopter Ben here the other day for his handling of the economy, we were only trying to provoke a discussion by suggesting he did only as much as was politically necessary. Could he have done more – or perhaps less – to put the economy back on track?  We doubt it.  In retrospect, less – much less – would have been the right course to have followed. But since when has the Fed ever been allowed by the tide of popular opinion, let alone by the whim of political desperation, to do nothing while the economy sank into deepest recession? Some readers said that if they’d been in Bernanke’s shoes, they’d have had the courage to do the right thing anyway:  letting the banks fail -- and with them the entire financial system. But it is naïve to think that mere courage would have sufficed to carry the day politically for laissez faire’s version of the nuclear option. Indeed, many a courageous leader has wound up in front of a firing squad.  Bernanke, and more than a few of his colleagues, would have found themselves in front of one too if, arguably, just one more company, AIG, had been allowed to fail. The fact that Bernanke’s egregiously misguided efforts have set the U.S. economy inexorably on course for a Second Great Depression is as much an indictment of our political system as it is of one man.  Some would say he deserves all the blame anyway because, as chairman of the Federal Reserve, he is The Most Powerful Banker in the World. But we never bought that

It is shortly before 1 a.m. EDT, and the E-Mini S&P is threatening to break loose for an 11-point run. I'd suggested looking for "camo" cover on the one-minute chart, and although one such opportunity has already occurred, there may be others in the offing.

The December contract has two ABC uptrends driving it right now, one big and one small, so wheat traders should be looking eagerly for a place to jump aboard.  Full disclosure: I am not a wheat trader.  I HATE wheat futures.  The little S.O.B. hits its targets, but the path it takes is often vexatious, if not to say downright bamboozling. So I'll leave this one to you while noting that it looks possible to find camouflage on the hourly chart, so eager does this vehicle look to leap.  On the hourly chart, an entry signal was just tripped at 685.75, but the next will come on a breakout above a related midpoint at 706.50. _______ UPDATE (1:39 p.m. EDT):  The futures are currently at 716 after rallying as high as 721.75 earlier in the session.  If you caught the move, treat yourself to a Havana cigar, or take the Missus dancing.

With a thrust this week exceeding 78.70, DXY has the potential to create a robustly bullish impulse leg of daily-chart degree.  Assuming the rally eventually gets past that number, even though it wouldn't necessarily be a paradigm-changer, it would generate a bullish event that we could ill afford to ignore, much less disdain.