Monday, January 30, 2012

Last week's rally was quite encouraging, since it exceeded three prior peaks on the daily chart.  Since there have been no B-C pullbacks yet, the impulse leg could conceivably surpass even more peaks before it takes a breather.  Night owls and camouflageurs should look for entry signals on the 3-minute chart or less.  As of this moment, there's a superficially enticing pattern developing on the '3'', but the ugly double-bar 'A' makes it less than opportune.

Stocks and bullion have noticeably decoupled recently, but only mildly, and the effect so far is not strong enough to allow them to go their separate ways. Gold was up moderately early Sunday evening, but with DaBoyz manipulating index futures lower -- now by nearly 8 points in the E-Mini S&Ps -- gold and silver have given up their modest gains and are trading nearly unchanged.

We hold a two-contract tracking position whose cost basis, adjusted for paper gains on six contracts already exited, is 1715.10. A 1720.00 stop-loss should be used for both in conjunction with a one-cancels-other order to exit one contract at 1740.70. That's slightly below a minor Hidden Pivot target, and although Sunday night's nasty bull trap missed our number by a hair, the stop-loss still applies.  These numbers relate to the March contract, but you should roll into the Aprils as soon as possible, allowing a price differential of about $3.  Basis April, a stop-loss of 1724.30 would apply in conjunction with a closing order on one contract at 1744.90.  Our adjusted cost basis will be 1718.10.  As of around 8:35 p.m. Sunday (EST), the corrective weakness targeted 1729.20, basis the February futures.

Sunday night's presumably stage-managed weakness has bounced precisely from the minor Hidden Pivot support at 1305.00 shown in the chart. Any lower, however, and some real selling could hit, sending the futures down to at least 1298.75 (see inset) overnight. You can bottom-fish there with a stop-loss as tight as 1.00-point, but the preferred way to enter would be via a 'camouflaged' abc uptrend from the target, using the very lesser (i.e., one-  or three-minute bar) charts.  Alternatively, bulls would regain control with a print exceeding 1320.25.  Check out the 5-minute chart to see why that could conceivably set up an opportune 'camo' buy signal.  Want to learn how to find these entry spots yourself?  Click here for information about the upcoming Hidden Pivot Webinar.