As The Great Recession tightens its grip on the urban slums of the U.S. and Europe, a darker side of social networking has begun to emerge. Last week, the civilized world was appalled to read about rioting British “youths” tweeting their friends and comrades-in-arms to join the fun. “We need more MAN than Feds so Everyone run wild, all of London and others are invited! Pure terror and havoc & Free stuff…just smash shop windows and cart out da stuff.” Ahh, “da stuff!” Such swag as has seldom been seen in London’s dismal rookeries: bowler hats from Locke. Brigg umbrellas. Church shoes. London’s bobbies should have no trouble picking out the perpetrators on Monday. They’ll be wearing bespoke suits that fit as poorly as O.J.’s infamous glove. Yobs will be firing up Cohibas with (unmonogrammed) Dunhill lighters, broad-tossers’ wrists will be adorned with Patek Phillipes, and louts will be ordering up Dom Perignon by the flagon in Piccadilly taverns. » Read the full article
The rally target at 1227.75 that was in play in Friday is still in play. As I’d noted earlier, choppy action has brought the futures to within two ticks of the 1187.25 midpoint associated with that target. The fact that that midpoint was precisely achieved by the day’s two failed rallies suggests that the 1227.75 target will be useful to us. However, because the target is by now perhaps too well “advertised,” I’d suggest using camouflage on the 15m chart or less if you plan on using this high-odds Hidden Pivot to get short. In the meantime, because there is 50 points of implied upside if and when the futures break decisively above the midpoint, using camo tactics to get long is strongly advised. Initiating bull trades near these levels may be easiest for Sunday night-owls, since the September contract created the kind of tedious chop on Friday that tends to leave our trading competitors waiting for “something” to happen. Our specialty, of course, is using impulse legs to alert us to the very first sign that something is about to happen. Want to learn to use the Camouflage Trading Method yourself? Click here for information about the October 5-6 Hidden Pivot Webinar.
The futures have sold off moderately after making a marginal new high on Thursday. Even though they could be carving out an important top here, I adhered to a tight stop-loss nonetheless because that’s the way I do things, always following my discipline. However, if you held onto the short from 1982.50 and want me to establish a tracking position for your further guidance, please let me know in the chat room. It is already implied that you’ll need a pullback to at least 1973.50 before implementing a trailing stop, since you’ve already weathered a 3.00-point swing against the position.
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.
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.
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.
The futures looked like they could go either way as Monday’s session drew to a close. However, the stall within 0.70 of the 1318.30 midpoint resistance I’d flagged implies that a decisive move past it would reach its D-target sibling at 1331.60. Alternatively, my worst-case target for the near term would be the 1278.20 Hidden Pivot support in the lower-right quadrant of the chart — or possibly even 1271.70 if any lower. The accuracy of this target would be affirmed by a bounce, possibly tradable, from within two or three ticks of the 1302.00 midpoint support. ________ UPDATE (9:57 a.m. EDT): Gold has bounced $14 this morning from a low just two ticks (0.20) from the 1302.00 midpoint pivot flagged above. Now, if the futures breach the support, we’ll know EXACTLY where they are headed. _______ UPDATE (July 23, 12:01 a.m.): Someone in the chat room said that because everyone seems to be bearish on gold right now, perhaps we should take the other side of the bet. I’m a bit bearish myself, and thus this response: “Rather than take chances and let gold disappoint us for the zillionth time, we should simply stipulate that the August contract close above 1318.90 before we get excited. That’s the midpoint resistance, on the 180-minute chart, of a=1292.60 on 7/15; b= 1325.90 on 7/27; and c=13-02.20 on 7/22. At that point, I’d lay even odds of a move to at least 1335.50; above 1337.00, the futures would be a good bet to hit 1381.40. Whatever happens, bulls will have to prove their case. _______ UPDATE (July 24, 1:20 a.m.): Sellers paused for a relatively blissful nine hours yesterday just inches above the 1302.00 ‘hidden’ support I’d flagged, presumably to sniff the flowers before going back on the attack.
Netflix’s so-far $37 selloff has followed a peak last week at 475.87 that slightly overshot a Hidden Pivot at 474.50 I’d characterized as ‘a big-picture target where an important top is even more likely.’ A chat-roomer who evidently took this prediction to heart reported buying puts last Thursday for 1.24 that he cashed out for 8.90 yesterday. This could be just the start of NFLX’s comeuppance for all those who inflated this gas-bag to undeserved heights. If you took a position and are still holding it, please let me know in the chat room and I will update guidance. For now, though, let me suggest that you take profits on half of any short position entered near the recent top. _______ UPDATE (July 10, 10:23 p.m.): Bears failed to achieve a Hidden Pivot target yesterday, presumably because DaBoyz shook the stock down so hard on the opening bar that it exhausted sellers prematurely. The missed target suggests that traders will enjoy decent odds bottom-fishing the midpoint pivot shown at 433.62 (see inset, a new chart) with a stop-loss as tight as 8 cents. If it’s hit, expect the selling to continue down to at least 423.05, a Hidden Pivot that can be bottom-fished with as tight a stop-loss as you can abide. _______ UPDATE (July 14, 11:07 p.m. EDT): A turn from 428.20, precisely between the two pivots flagged above, left our bid high and dry. The bull leg that has followed could be the start of a rally cycle with the potential to reach 486.86. First, though, let’s see whether buyers can tackle a midpoint pivot at 457.53 that is associated with the target. _______ UPDATE (July 16 at 6:47 p.m.): Let’s not overlook the downside — specifically, the 433.69 midpoint pivot and its D sibling at 411.67. Bears can short the break for a move to either, and both can be bottom-fished with the tight stop-loss you can abide. ______ UPDATE (July 22, 12:15 a.m.): The stock turned higher from $2 above the midpoint support, implying that bulls are about to dominate once again. Call prices are on the moon, however — way too expensive for a straight directional bet. Instead, I’ll suggest buying the August 2 – July 25 calendar spread eight times for 1.50, day order, contingent on the stock trading 451.00 or higher. Please report any fills in the chat room. _______ UPDATE (July 22, 12:05 p.m.): With today’s huge air pocket, the stock obviously remains in the grip of DaBoyz. My assumption will always be that steep declines in NFLX are brazen shakeouts, engineered by strong hands to steal stock at fire-sale prices from weak hands. In this instance, the downdraft appears likely to hit 413.00 before DaBoyz run it up again. If and when that number is hit, you can bottom-fish there with the tightest stop-loss imaginable. (Note: I’ve revised the target downward by 0.96 since the original update. Also 435.25 is the midpoint pivot and therefore worth a tightly stopped short on a rally to it.)