Monday, December 19, 2011

A minor downtrend from Sunday's 29.795 high pointed to at least 29.370, but if that Hidden Pivot gives way easily we should brace for more selling down to the 29.170 target of the pattern shown. Alternatively, bulls would need to push this vehicle to 29.870 today to send the bad guys diving for cover.  All of these price points are shown in the chart.

Trading has begun Sunday evening with a likely head fake (aka bull trap), since the initial, distributive rally could not get past the look-to-the-leftish peak at 1611.40 (see inset).  Buyers could turn things around by exceeding that peak before dawn, but we should set the bar a little higher, above the peak at 1620.80, just to be sure.  Bears would regain the offensive on a downdraft that exceeds lows #1 and #2 without an intervening b-c rally.

We own four January 134 calls @ 0.34.  Continue to offer eight January 137 calls short against them for 0.36. Flat holiday retail sales and sinking hopes for financial Europe are turning this play into a longshot bet. However, it's always possible that Wall Street's best and brightest, fueled by hysterical short-covering at the start of the New Year, will succeed in creating one last opportunity to distribute stocks before They pull the rug. If weakness prevails this week, my minimum downside objective would be the 115.72 midpoint of the pattern shown.

We are long a single contract with a cost basis of 1156.00. The 17-point drop from Friday's high missed our 1207.75 stop-loss by two ticks, but be prepared to exit on that number Sunday night. That would give us a gain worth a little more than $2500 on paper.  ______ UPDATE (7:29 p.m. EST): The futures touched the stop moments ago, so we'll move to the sidelines. It's always hard to tell about these Sunday night shakedowns, but we'll avoid this one since both 'p' (1206.00 ) and 'D' 1197.75 coincide with previous lows that are likely to entice the riff-raff into bottom-fishing.  However, if the futures get away from the dirtballs who are maneuvering them lower at this moment, they could plummet to 1179.00. That's a Hidden Pivot you can bottom-fish either with camouflage or an 1179.25 bid, stop 1178.25.  Its 'p' sibling lies at 1202.00, but bidding there is suggested only for those able to employ camouflage. If an order fills there via a picture perfect 'camo' reversal, I'll establish a tracking position of four contracts for your further guidance. _______ FURTHER GUIDANCE (11:12 a.m. EST): We initiated a long position at 1206.00 following a perfect 'camo' pattern off an overnight bottom at 1201.75. On the 10-minute chart, the abc coordinates -- all single-bar! -- lay, respectively, at 1201.75, 1207.75 and 1204.50.  Two contracts were to have been exited at the 1207.50 'p' midpoint, and a third at d=1210.50. This gave us a profit-adjusted cost basis of 1198.50 for the contract that remained. It was exited minutes ago at 1210.75, based on the bearish impulse leg created via a dip beneath the 1211.00 'external' low recorded on the way up at 4:10 a.m. Our theoretical paper profit for each four-lot entered was $600. It would seem that in

Does the chart below of the Dow Industrial Average make you feel bullish? Bearish? Neutral?  We’re not sure ourselves. Although we’ve been using technical analysis for nearly 40 years, the chart doesn’t speak to us. At best, it leaves us with only a moderately bullish bias for the near term  -- and a vague feeling that the meaningless price swings that have ruled the markets in 2011 could continue for longer than we would care to imagine, let alone explain  This is hard to believe, especially with so many dreadnoughts bearing down on the global economy and banking system. The U.S. is re-entering a recession that never ended for most households. China has hit the brakes in preparation for a slowdown in global trade, and the country’s real estate bubble appears to be deflating with a vengeance. Jihadists are planning naval “maneuvers” in the Strait of Hormuz. Bird flu and the bubbling Yellowstone caldera threaten us with extinction. And there is of course Europe, faced with the impossible choice of either monetizing the debts of countries that will never be able to pay them, or letting those countries go bankrupt. We think it is the latter option that will forced on decision-makers, since rich-uncle Germany understands that throwing another two or three trillion euros of debt-money at the problem will not fix it.  In any event, the decision cannot be delayed for much longer, since interest rates for sovereign borrowers are becoming increasingly uppity. For Italy, most crucially, rates are edging back toward 7% -- the extreme end of the red zone politically and economically – within days of each new phony bailout scheme hatched in Belgium. A disaster is coming, and it is only a question of when. Like a Kite in a Gale And yet, U.S. stocks continue

Stocks and bullion were soft Sunday night in turgid action, so I've emphasized mildly bearish possibilities in my touts for index futures and bullion.