Wednesday, December 28, 2011

A bearish target at 27.018 previously noted here remains my minimum downside objective. I would strongly encourage buying there, especially via camouflage, but if the hidden support is decisively breached, be aware that its 'D' sibling lies all the way down at 18.355.  A fall of that magnitude would not be an odds-on bet at that point, but it would place the burden of proof on bulls every time they get a minor rally going, since impulsive failures would be especially telling. An alternative pattern (where A=40.690 on September 21) yields a somewhat less disastrous worst case, since the relevant 'D target is 21.175.  Its 28.425 midpoint has been exceeded by 30 cents, however, and that is of course bearish.

With the decisive breach of the 1593.30 midpoint support shown in the chart, the futures appear to be headed down to at least 1571.00, its 'D' sibling.  Please note, however, that an uptrending reversal without having reached that number would be warning shorts to step aside. The bullish scenario would be actualized by a push past the midpoint resistance of a larger, bullish pattern begun on December 15 from 1566.20. ______ UPDATE (10:42 a.m. EST):  Gold is getting hit today and was down $25 at its so far low -- 50 cents from my target -- at 1570.50.  If you camo'd your way aboard near the bottom, keep in mind that a decisive breach of the so-far low would portend more slippage to as low as 1445.70 (!), a very important Hidden Pivot that comes from the daily chart (A=1760.50, B=1562.50 and C=1643.70.)

The futures receded timidly yesterday after bullying a minor midpoint resistance at 1163.25. The overshoot was just three ticks, but if buyers had kept going they might have rampaged all the way up to...1167.00!  That's a Hidden Pivot target of minor consequences, but as we pointed out in an intraday update, it's within spitting distance of the 1169.25 print that would turn the daily chart unambiguously, impulsively bullish.  We advised camouflageurs to take a few small shots at these levels, since, even though there's no strong evidence the futures are about to pop, we'll be getting great odds. Keep in mind that if stocks do get short-squeezed, the drama is all but certain to occur overnight, shutting out most of the trading world. Accordingly, night owls should be prepared for a bullish reversal from 1255.25, a 'D' correction target shown in the chart. The downtrend has stalled precisely at the 1258.00 midpoint, so there's a possibility the turn will come from these levels. _______ UPDATE (10:36 a.m. EST):  The correction has overshot 1255.25, creating a new (and potentially tradable) downside target at 1246.25. Camouflageurs might look to get short if the upward correction of the moment hits 1250.75, a p midpoint associated with 1246.25. (Note:  Within 45 minutes of the above update, during the weekly tutorial session, we got short via camouflage. You can see how by reviewing the recording of the session. It is accessible online to all who have taken the Hidden Pivot Webinar and who are registered.  Hitting these highs and lows within a tick or two is a simple parlor trick that you too can learn in a month. Click here if you think you’re ready to try.

If there's no one around to hear bad news, is it bad news?  Apparently not.  Amidst some less-than-believable sightings of green shoots come reports of a drop in home prices at a time when mortgage rates are at record lows.  Somewhat more credible, although perhaps only slightly so, is an Iranian threat to block the Strait of Hormuz, through which a fifth of the world's oil supply passes.  The Iranian president says the threat is in reaction to a piece of U.S. legislation that, once signed by Obama, would reduce Iran's oil revenues. The intent is to deter Iran from making a nuclear bomb, but who actually believes the mullahs will be so easily deterred? In any event, NYMEX crude rallied $2 intraday but has risen only a further six cents Tuesday evening.  Through it all, Rick's Picks has experienced a drop-off in holiday-week traffic that suggests its subscribers will not be the ones moving markets in the remaining days of 2011 no matter what the news. Still to come, on Thursday, is what will have to pass for economic news this week: initial claims for jobless benefits, the index of November pending home sales, and December's Chicago purchasing managers index. Will we be able to stand the suspense?