November 2011

We're still expecting this rally to reach a minimum 1278.25, but expect 1305.25 if it goes any higher. If you're planning on trading the move from either side of the market, I'll recommend that you check out the chart archived with yesterday's tout for this vehicle.  My preference is for a 'camo' long from somewhere near 1278.25, but that number can also be shorted with camouflage if you know what you're doing.  That would be a risky play, though, since a print at 1278.25 would refresh the bullish energy of the hourly chart by exceeding a look-to-the-left peak from Halloween. ________ UPDATE (10:38 a.m. EDT): The daisy petals evidently have decreed today that Europe must die, although, as we know, the grim prognosis could change overnight, bringing headlines of some new bailout "plan" to "save" Greece, Italy, et al.  However, the fact that the E-mini's have created a bearish impulse leg on the hourly chart without having achieved a 1278.25 rally target that looked like a lay-up implies the selloff will be more than a one-day wonder. If so, the futures have a further 43 points to fall, to the 1194.50 Hidden Pivot 'D' of the daily-chart pattern begun on 10/27 from A=1289.25. Moments ago, the selloff breached a third 'external' low at 1236.50, amplifying the bearishness of today's refreshing slide.

Since today's guest commentary from Chuck Cohen talks about an impending boom in junior mining stocks, it might be a good time to look at the chart of Premium Exploration, an Idaho firm whose gold mine I visited in the summer of 2010. Everything about the company impressed me at the time, but Premium's considerable strengths, including excellent management and promising core samples, have evidently been lost on investors since at least last April, when the stock peaked around 81 cents a share. It has fallen by 75% since, and, to speak bluntly, there is nothing especially encouraging in the technical picture at the moment.  Under the circumstances, you could say that Premium is a good company whose stock has been unjustly pounded nearly to death -- and therefore an excellent mine canary to tell us when the junior explorers are really and truly ready to move. In Premium's case, it would take a pop above 0.3245, the second of two peaks whose breach to the upside would create a bullish impulse leg of  daily chart degree.  Accordingly, I've set a screen alert and will signal you in turn when there are signs of life. More immediately, with the recent breach of a minor midpoint support at 0.2673, the nearest logical place for a bullish turn would be from its 'D' sibling, 0.2143.  Failing that, the next technically logical stop on the way down would be at 0.1991, the Hidden Pivot midpoint of the larger pattern.  Stay tuned, since I'll be monitoring this stock's vital signs very closely.  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 November 16-17 and a $50 discount.

Stocks moved blithely higher yesterday, ignoring the fact that a terminally ill Greece has now been joined by Italy in the headlines. Perhaps the wacko traders who move the world's markets were relieved that no one thought to mention Spain?  In any case, although my technical forecast for index futures calls for higher prices over the near term, I'd advise tight stops under any longs.  With earthquakes happening in Oklahoma, it might also be a good idea to keep a full tank of gas in your car in case you need to outrun effusions from the Yellowstone caldera.

December Crude's 99.60 rally target (see inset) looks like a lock-up to me --  a pity, perhaps, since prices at the pump have been uncharacteristically soft recently but are bound to surge with a vengeance when the headlines shriek yet once more about $100-a-barrel oil.  Hawk-eyed Pivoteers might notice in the chart that although the rally has proceeded with little trepidation, there were numerous instances where impulsive thrusts followed the creation of second point 'C' lows.  To leverage this propensity, I'd suggest attempting entry on each second 'x' entry signal generated on the hourly chart. This is a tactic I've never recommended before, at least not in the context of a trading tout, but it would appear to suit the behavior of this predictable but always-nasty vehicle.

A 1305.25 rally target remains our lodestar, but a more immediate concern is the 1278.25 target of the lesser pattern shown.  If it is approached, or better yet exceeded by just one tick, that could set up an excellent long-entry opportunity for a ride into the wild blue yonder.  Notice the tiny, look-to-the-left peaks just above and below the target, including one at 1278.25.  The pullback following any impulse leg exceeding those peaks could possess the subtlety we need to catch a nearly riskless ride to the higher target at 1305.25.

Tonight's stall at 35.010 implies the futures will be on their way to exactly 36.205 once the lower number, a midpoint resistance, has been decisively exceeded.  The pattern, both clear and compelling, is shown in the accompanying chart. I have also labeled a look-to-the-left peak at 35.090 that is not a true peak on the hourly chart but which becomes one on intraday charts of lesser degree. It can be used for initiating a camouflage long entry, since any pullback from just above it could create the abc pattern we need to generate a subtle entry signal with relatively little risk.  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 November 16-17 and a $50 discount.

[In the guest editorial below, our good friend Tom McCafferty, a veteran commodity trader and author of numerous books about trading and the markets, recalls the challenges of boot camp in sizing up America’s economic predicament.  The nation will need every ounce of strength, courage and Yankee know-how it can muster to avoid slipping into a deep economic coma, says Tom. Are we up to it?  With Europe on the brink of collapse, we may find out sooner rather than later. RA] “Get off your dead ass and onto you dying feet!” Those of you who spent your wayward youth as part of the Corps can remember your First Sergeant bellowing these words, as you ended a rest break half way through a 50-mile hike at Camp Lejeune on a hot August day.  Guess what?  Europe is about to become you new First Sergeant. Europe is headed for a major depression … like the good old days of 1929!  The Great Depression lasted over a decade in the U. S., even with all the market and job creating stimulus FDR could beg, borrow and steal from Congress.  It took World War II to get us working again.  Then, if we, our allies and even our enemies, hadn’t bombed just about every factory and storage facility in the world, leaving the U.S. with the only working factories and cargo fleet intact in the world, we still might not have gotten out of it.  The Great Depression could easily have gone on for decades and decades. If Greece thinks they deserve a 100% haircut on their precious bonds and opts out of the EU, you can bet half the banks in Europe and a few in the U. S. will tank.  This will be quickly followed by Italy, Spain, Portugal, and Ireland

Big-picture rally targets at 36.450 and 37.870 remain valid, but more immediately, we should focus on the 35.440 target of the pattern shown.  The futures have been struggling with its midpoint sibling at 34.625 since Friday, and although they traded briefly higher than that as the week drew to a close, the resistance was impeding buyers late Sunday night. There was a potential camouflage entry opportunity developing nonetheless that is also shown in the chart. If it hits 'x' after creating a single-bar 'C' on the 15-minute chart, my advice is to buy-stop your way aboard and take half the position off at the p midpoint. ______ UPDATE (10:59 a.m. EST):  Close but no cigar. The futures shot up to 34.535 overnight, but it was off a double-bar point 'C' that was best avoided by camouflageurs.  For now, the midpoint resistance at 34.625 remains the number for bulls to beat.

A Hidden Pivot resistance at 1785.60 remains my minimum upside objective for the moment, but a close above it, as noted here earlier, would put the 1830.50 target of a larger pattern in play. Early Monday morning, the futures were nicely on track to continue higher, having pushed past the 1772.60 midpoint pivot of the pattern shown.  It's 'D' sibling lies at 1795.30, at which point the round-number benchmark at 1800 should be magnetic. _______ UPDATE (11:29 a.m. EST): The 1785.60 target given above appears to  have caught the top of a $30 rally within a single tick.  The pullback from this morning's 1785.50 high has come down to 1781.60 so far.  Someone in the chat room mentioned having gotten short at the top. If you did likewise, perhaps reversing a long position, I'd suggest taking a partial profit here and tying the rest of the position to an impulse-leg stop on the one-minute chart. At this precise moment, that would imply exiting at 1785.10.