August 2011

As of around midnight, Tuesday night's lows have fallen within three ticks of an 1185.75 midpoint support whose breach would be telegraphing more weakness over the near term to at least 1175.50, its 'd' sibling.  The bounce thus far is ostensibly bullish, but it will have to go a bit further to provide us with the kind of easy entry opportunity that we look for.  Specifically, traders should use the 1190.50 peak-let shown in the chart for camouflage, provided the thrust that exceeds it slightly retraces to set up a C-D follow-through with a conventional 'x' entry point.  All of this is sketched out in the chart, so check it out.  Want to learn how to identify and use "camouflage' trading set-ups yourself in just six hours? Click here for information about the upcoming Hidden Pivot Webinar. _______ UPDATE (10:34 a.m. EDT):  A pattern very similar to the one shown in the chart played out overnight, generating a C-D rally that got within two ticks of its 1199.25 target. The 'buy' signal came at around 5 a.m. for an entry at 1190.75.  In theory, the trade could have produced a gain of as much as $400 per contract if you exited at the target.  The futures have moved higher since to a so-far peak at 1206.75, so if you held onto any part of the original position, you'd be reaping further gains.  The 1227.25 target given here earlier remains valid.

I'll be in transit Tuesday but will drop in the chat room if time allows. This week's tutorial session will be held as usual on Wednesday morning, but it's possible there will be no recording, since I'll be using a technology on-the-road that I haven't tried before.  As we went to press around 8 p.m. EDT, gold and silver were holding onto gains achieved during the day without much effort.

A moderate rally targeted on a Hidden Pivot at 40.770 was cut short by the bell yesterday, although night owls will have a chance to finish the job once a shallow correction in progress early Monday evening has run its course, as seems likely. Camouflageurs can look for a bullish turn near 39.350, the target's midpoint sibling, but it will take a thrust to at least 40.755 to take out the tiny but crucial resistance of a look-to-the-left peak from August 4 that is discernible as such only on the very lesser charts (i.e., 3-minute or less).

Once more, Gold has gone down for the "mandatory eight count" only to spring back to its feet, dust itself off and run right back up the ol' wazoos of the Bad Guys. The rally has exceeded the 1761.10 benchmark I'd noted here earlier, ensuring that a new bullish impulse leg will be created on the hourly chart as soon as a pullback occurs.  This hasn't happened yet, but if the AB-leg top is in at 1772.70, the retracement would need to come down to at least 1763.30 before we could consider the futures fully charged for a D-C follow-through rally.  From a low at that price, a Hidden Pivot 'D' target at 1801.50 would be in play. Night owls looking to get long via camouflage should go to the five-minute chart and use several peaks made on the way down on Friday.  As of around 7:25 p.m. EDT, just such a peak at 1769.90 had been surpassed.

We'll break a rule to try to short this rally, but you'll need to rigorously apply the stop-loss I'm going to suggest if you do the trade.  The 55.77 rally target shown in the chart is analogous to the one at 1227.25 that I've flagged in the E-Mini S&P.  As you will also notice, however, any upthrust that hits that hits 55.77 is going to surpass a couple of prior peaks on the hourly chart, refreshing its impulsive bullishness.  Be that as it may, I am going to suggest that you buy four September 55 puts if and when the Cubes get within 0.03-0.05 points of the target. You can do bigger size if you are confident you've got things under control and that know what you are doing, but blow out the position if the puts trade for 0.25 less than what you paid for them.  This is NOT one of those trades where I can more or less guarantee that even beginners will make easy money, since, as I've implied above, the futures could easily move higher after pulling back from the target.  I will therefore also suggest that if the position is showing a profit of at least 0.30 per option, that you close out half of the puts.

Who would have imagined a dead cat could bounce with such ferocity?  Anyone who has ever observed a bear market in action, is who!  And you had better get used to it, since this is exactly the way bear markets behave.  One more thing:  Although we "know" the Dow is going many thousands of points lower eventually, that doesn't mean it will be easy to profit from the wild swings that are gong to take the broad averages to Mindanao depths. For now, however, let's take stock of this bull phase by sticking with the 1227.25 target given here earlier.  We can always take comfort in knowing that the bear, no matter how devious, is incapable of fooling us as long as we stay focused on impulse legs of minor degree going.  Click here if you want to learn how to do exactly that without my help.  Remember, you're just six hours from being able to kiss your stock-market guru good-bye.  Traders: As we know, the E-Minis could turn lower with a vengeance without having reached the target.  Although camouflage shorts from within a point or two of 1227.25 will be easiest, I'll suggest looking for the turn from here on up if you want to be certain of getting on board.

We wish Google all possible success in taking on playground bullies Apple and Microsoft in a battle that has crucial implications for the use of patents to stifle competition. Google’s $12.5 billion purchase of cell phone maker Motorola Mobility, its largest acquisition to date, is a shot across the bow of more established competitors who would seek to throttle the search engine giant’s cell phone development and other promising technologies by suing them to death in patent court.  The Wall Street Journal recently detailed how high tech companies have been acquiring every patent they can get their hands on so that they stand a better chance of being predator rather than prey in patent litigation. Lawsuits over patents have become so ubiquitous that they are beginning to supersede innovation itself as the primary means through which high tech companies grow and prosper. In this respect, Google is the new kid on the block in head-to-head competition with firms like Microsoft and Apple that have been around since the 1980s.  As a relative newcomer to the technology scene, the company’s war-chest of patents was practically empty until recently. To play catch-up, Google has been on a tear acquiring patents directly or buying patent-rich firms outright, such as cell phone pioneer Motorola.  In late July, Google bought about a thousand pending and issued patents from IBM to build up its patent ammo. Many of these patents have little to do with the company’s core businesses of search and advertising. One reportedly covers ways of automatically adjusting a clock, and another deals with surface treatments for electrical contacts. In the hands of a company as innovative and aggressive as Google, every little patent helps to thwart other firms that would seek to stifle them. “As things stand today, one of a company’s best

Targets well above these levels that were flagged a couple of weeks ago are in play at the moment, the futures apparently having completed a consolidation just above the 664.50 midpoint resistance associated with the lower of the two.  Our immediate 'D' objective lies at 753.50, but as noted here previously, anything decisively above it will imply 791.50.  To get long, even camouflageurs will have not be at their most alert, since this is not IBM, or  the E-Mini S&Ps, or any of the other vehicles that are usually easy pickings for us.  It is in fact one of the most cagey and devious vehicles we could look to trade, since it is the bread and butter of a thousand guys whom you would never want to play poker with.  For starters, you'll find that entry prices will be exceeded on gaps and that, even on the five-minute charts, multiple 'c' lows will be carved out before this quintessentially nasty little critter takes off.

Here's the peerless Mark Steyn, writing about London's riots in his latest column: Several readers wrote to taunt me for not having anything to say on the London riots. As it happens, Chapter Five of my book is called "The New Britannia: The Depraved City." You have to get up pretty early in the morning to beat me to Western Civilization's descent into barbarism. Anyone who's read it will fully understand what's happening on the streets of London. The [debt] downgrade and the riots are part of the same story: Big Government debauches not only a nation's finances but its human capital, too.  This is the logical dead end of the Nanny State. When William Beveridge laid out his blueprint for the British welfare regime in 1942, his goal was the "abolition of want" to be accomplished by "co-operation between the State and the individual." In attempting to insulate the citizenry from life's vicissitudes, Sir William succeeded beyond his wildest dreams. As I write in my book: "Want has been all but abolished. Today, fewer and fewer Britons want to work, want to marry, want to raise children, want to lead a life of any purpose or dignity." The United Kingdom has the highest drug use in Europe, the highest incidence of sexually transmitted disease, the highest number of single mothers, the highest abortion rate. Marriage is all but defunct, except for William and Kate, fellow toffs, upscale gays and Muslims. From page 204: "For Americans, the quickest way to understand modern Britain is to look at what LBJ's Great Society did to the black family and imagine it applied to the general population." The complete essay can be found by clicking here.