Wednesday, March 21, 2012

Bearish correction targets at 1623 and 1588 still beckon, but we shouldn't ignore the small encouragement of a bullish impulse leg that was created by a modest upthrust late Tuesday night. It is shown in the accompanying chart, and although the pattern has already triggered a false entry signal at 1655.00, another that would follow a second point  'C'  in the making is reason enough for night owls to pay heed. _______ UPDATE (9:35 a.m. EDT): Entering at the second 'X' would in fact have produced a profitable trade to within 0.90 of a 1660.00 target. A somewhat larger, easily tradable  uptrend that began yesterday from 1641.20 at 8:30 a.m. also narrowly failed to reached its target, 1661.20, foretelling the pooch-screwing, feeble price action that is continuing as of this moment.

I'm no longer recommending a tightly stopped short from 1412.50, since it is tempting fate to try it ahead of housing data that is all but certain to provide DaBoyz with short-squeeze ammo.  However, we can still attempt to get short via 'camouflage' as suggested here earlier. Traders should start looking for a tradable downturn if and when the futures touch 1410.50, and to initiate the trade on the first downtrending 'X' that meets our established criteria. If there's an obvious fill (and corroboration thereof in the chat room), I'll establish a tracking position for your further guidance. [Click here for details concerning our upcoming webinar on 'camouflage trading' and the Hidden Pivot Method.]

For reasons gone into during yesterday's impromptu webinar, we'll need to wait for the right opportunity even if it means missing a trade.  Two factors are working against hunting for camouflage right now: 1) the stock has yet to achieve the higher of two downside Hidden Pivot targets; and 2) yesterday's selloff was bearishly impulsive on the hourly chart, having surpassed the look-to-the-lefter shown at 26.44 (12/30).

It’s late Tuesday night and index futures are wafting higher, not so much propelled by buying as made temporarily weightless by the blissful absence of volume. The E-Mini S&Ps are trading 1405.00 at the moment after having failed to head-butt their way any higher than 1402.00 earlier in the day. This suggests DaBoyz are building momentum for a short-squeeze ahead of Wednesday’s opening. They’re bound to get help when existing home sales are released, since this particular datum has quite evidently been brought to heel by Team Obama 2012.  The near certainty of a bullish housing number raises the question of whether we should want to risk impeding a possible buying stampede with the short offer we’d placed earlier at 1412.75. The answer is a qualified yes, although no longer via a straight offer at that price with the usual micro-tight stop-loss. We’d originally recommended that tactic to Rick’s Picks subscribers, along with another, more challenging, “camouflage” entry strategy that would attempt to control risk even more tightly. The latter is generally a wise course to follow in situations where the trader could get blown out of the water for the mortal sin of having followed heart and mind rather than instinct. The three are rarely aligned, especially when stocks have spent the last three years climbing a wall of worry that might have seemed insurmountable to some.  But just as paranoids can have actual enemies, cynics who think bulls must be out of their minds can sometimes be right.  Without casting aspersions on those who have been doing the buying, the cynic might also point out that rising shares have been driven less by bulls than by a tidal swell of easy money purposed to…lift asset values.  And of course, cynics married to bullion would further note that the