Friday, January 13, 2012

I usually put little store in head-and-shoulder patterns because they pop up everywhere one looks, but the one that Corn has been tracing out for the last year is hard to dismiss.  Beleaguered bulls will find little comfort in the specimen pictured, since yesterday's hellacious plunge did not even bring it down to the neckline. From a Hidden Pivot perspective, it would take an impulsive rally exceeding the  'external' peak at 679.50 to abort the pattern.  Failing that, Corn's bear market could eventually hit 480.

March Silver went impulsively bullish on the lesser charts late Thursday night, but this was after it achieved a 'D' target on a pullback. That suggests bulls will struggle on Friday and that any trades from the long side be done via a 'camouflage' entry that poses no more than $70 of theoretical risk per contract.  At exactly 1 a.m. EST, the three-minute chart showed an 'camo' pattern with a potential entry trigger at 29.985.  The coordinates are as follows: A=29.875, B=30.010, C=29.950 (Note: That last number is very tentative).  This set-up may be gone in five minutes, but I have presented it nonetheless so that you'll have an idea of what to look for if you want to get aboard tonight using charts of least-most degree.  Want to learn how we use Hidden Pivots and “camouflage” to reduce entry risk to relatively small change? Click here

The high of yesterday's thrust narrowly failed by 1.20 to surpass the microscopic look-to-the-left peak at 1664.00 highlighted in the chart, telling us that mild caution is warranted.  That's because healthy rallies tend to "refresh" themselves by creating new impulse legs with each successive upthrust; and this one didn't. Most immediately, the futures were in a correction that could go as low as 1638.40 (A=1657.30 at 11:30 a.m. on the 15m chart), predicated on a breach of the midpoint support, 1644.80.  ______ UPDATE (10:46 a.m. EST): The bad guys are in charge today, intent on driving the futures down to at least 1622.80 (15m, A=1622.90 at 10:15 yesterday) now  that they've obliterated the support mentioned above.

Because U.S. markets will be closed Monday in observance of Martin Luther King Day, the next Rick's Picks updates and commentary will be published Tuesday.  Have a great weekend!  Click here for a look back at the protests of the Sixties, complete with a 'Mothers' soundtrack that comes courtesy of our friend Jon Auerbach.

One step forward, two steps back.  At this rate, 2012 could come and go before the futures reach some of our more ambitious targets.  A less ambitious one at 1316.75 is where we should set our sights for now, and it would become an odds-on shot if and when the futures settle above a lesser target at 1301.75 broached here yesterday. The higher number's provenance is shown in the chart. Night owls should look for 'camouflage' opportunities on the 15-minute chart or less -- specifically via an external peak at 1292.75 that was within a hair of being exceeded.

[Rick’s Picks sometimes ascribes human, animal or even demonic qualities to the vehicles we trade, most particularly the ever-vexatious Mini-Index futures. The following, first published here nearly a decade ago, reminds us why. RA] In all the galaxy, could there exist a nastier little critter than the S&P futures? Yesterday, watching the [March] contract leave its hellishly agitated footprints all over my intraday charts, I was reminded of the creature in the movie Alien. In its “cute,” post-larval stage, the then knee-high monster resembled a small dragon, with tiny buzz saws and metallic razors in place of reptilian scales, and venomous syringes instead of teeth.  Those who saw the movie will not forget the way the creature skittered around the space station floor, finally disappearing for a few excruciating minutes before exploding, with a wicked, other-worldly cackle, from the chest of a hitherto unsuspecting male crewman. And so it was yesterday with the [E-Mini S&Ps], as they feinted and darted, bounded and careened, emerging with a bloody victory over all but the very hardiest of day traders. Talk about vicious! The S&Ps would make house pets of monsters such as the one in Alien. Thus, on Thursday, amidst brutal tedium and, until the final hour, trendlessness that was unusual even for this so-far excruciating post-holiday period, did the [March] S&Ps parry an intrepid army of traders, never sustaining a rally or decline for long enough to allow them to draw an untroubled breath. The invincible tormentor of these determined warriors is a Freudian nightmare come alive, an all-knowing predator whose every movement, at any instant of the day, is willed by a thousand ids and egos, each struggling to come out on top.  But even when the S&Ps are momentarily at rest they throb with menace, fueled by the unspent