Monday, September 19, 2011

Index futures are getting smashed tonight, but we’ve seen this sleazy Sunday shakedown so many times before that I won’t even bother to caution bears about what could come next.  The whole point of these quasi-criminal maneuvers, which occur nearly every Sunday night, is to exhaust sellers on extremely light volume so that there will be nothing to impede the all-but inevitable short-squeeze when it’s time to spring the bear trap.  In any event, check for ES tout updates overnight, since I will try to qualify the downside potential very precisely

The somewhat muddy corrective pattern shown in the chart hints of a tradable low at 694.50.  However, because the pedigree of the Hidden Pivot is dubious, any longs from near it should be initiated via camouflage.  To do so, I'll recommend looking for the turn on the 5- or 10-minute chart if and when the futures come down reach 696.25. _______UPDATE (11:59 a.m. EDT):  The bullish upturn came from 689.50, well below our Hidden Pivot retracement target, and the subsequent rallyeven on the one-minute chart yielded no patterns meeting our requirements for a 'camouflaged' entry opportunity.  There will surely be others, though, so stay tuned.

A bullish pattern similar to the one I've identified in today's Gold tout points to at least 41.255, a Hidden Pivot target that should be regarded as an odds-on shot now that the futures have exceeded its 'D' sibling at 40.790 early Sunday evening (EDT).  For night owls wanting to joining the party belatedly, the best opportunity to get long via 'camouflage' would come on a B-C pullback from just above the 41.170 peak-let noted in the chart. _______ UPDATE (12:58 p.m. EDT): Silver has gotten thwacked worse than Gold today, taking out Friday's lows without even having reached the midpoint resistance of the minor rally pattern noted above.  The implication is that it could fall to as low as 38.400 over the very near-term. If so, that will be an excellent place to try bottom-fishing with a tight stop-loss.  The target comes from the following coordinates, all nicely visible on the 30m chart: A=42.760 (a one-off peak recorded on September 9); B= 39.750 (September 12 low); and C=41.410).  The fact that the downtrend crushed the 39.905 midpoint of this pattern makes further weakness likely.

A previously noted Hidden Pivot resistance at 1224.00 is still my minimum upside target for the near term.  Please note, however, that it would come in the context of the "dueling impulse legs" shown in the accompanying, daily chart.  We should infer from this ambivalent price action that the bounce begun on August 9 from 1072.00 is not destined for greatness; rather, it is most likely a bull trap -- one, perforce, with enough power, persistence and...nastiness to have shaken most shorts loose by now.  If they are to get serious relief and have things go their way once again, it would be signaled by a downdraft today hitting 1182.25.  That would create a strong bearish impulse leg on the hourly chart by exceeding a low that marked a tradable bottom last week.  _______ UPDATE (12:14 a.m. EDT): After opening down 12.50 points Sunday night, the futures have drifted lower, to 1191.25.  They will need to fall a further 1.75 points to hit a Hidden Pivot midpoint at 1189.50 associated with the pattern: (5-minute chart) a=1212.75 on Friday's closing bar; b=1194.50 on Sunday at 6:25 p.m., and c=1198.50.  If the support is crushed, however, the next place where buyers might find traction lies at 1180.50, its 'd' sibling.  Either of those numbers can be bottom-fished with a stop-loss as tight as you can abide, but if the first is exceeded by more than a point or so, the second would become an odds-on bet. _______ UPDATE (11:54 a.m. EDT):  Last night's kamikaze dive stopped at 1181.50, a single point from my Hidden Pivot "deck". Most interestingly, even on the one-minute chart, at least two potential camouflage trades turned into bull traps by stopping out their respective point 'C's.

A previous peak, somewhat obscure, at 1851.50 recorded a week ago remains the number for bulls to beat if Friday's encouraging turnaround is to develop legs.  Assuming the pullback low at 1807.20 made Friday afternoon holds, my immediate upside target would be 1845.90, a Hidden Pivot that will be subject to possible resistance at 1826.60, its 'p' sibling.  (30-minute, A=1786.30 at 9:30 a.m. Friday). This rally pattern is not suitable for a camouflage entry, however, because of the sloppiness of point 'C', a three-bar affair on the 30-minute chart.  You will therefore have to improvise an entry strategy, but there are numerous small peaks made on the way down last Wednesday and Thursday that could serve nicely to set up A-B impulse legs with subtle 'X' entry points. _______UPDATE (11:42 a.m. EDT):  The rally pattern shown in the chart exceeded the 1826.60 'p' midpoint but failed to achieve its 'D' sibling at 1845.90. Instead, the futures have been beaten back toward Monday's lows near 1766 by the ostensibly deflationary "austerity" speech given by our ex-campus radical President. The so-far low has been 1771.00, just 0.50 from the 1771.50 target drum-rolled and spotlighted here in several touts last week. Meanwhile, we shouldn't fear Obama's latest idea, since, like every other leftist, politics-of-envy budgeting scheme he keeps proposing over and over and over again, it has zero chance of mustering a House majority. Want to learn how to nail swing highs and lows precisely, and to manage trade risk yourself? Click here for information about the upcoming Hidden Pivot Webinar on October 5-6 and a $50 discount.