Monday, June 4, 2012

I'll be returning to Denver Monday after 18 days on the road.  Over the time I've been away a likely bear market has shown its claws. There will surely be many opportunities to profit in the months ahead from both the long and short side, but my focus most immediately will be on intraday setups that would allow us to get short with as little risk as possible.  If you'd like to stay on top of real-time trading opportunities that might result, I recommend signing up for 'E-Mail' notifications on your 'My Account' page.

Last week's dip beneath a 194.84 midpoint implies more weakness is likely, presumably to the 191.42 'D' target of the pattern shown. Using camouflage on the 5-minute chart or less, traders should attempt to short any rally that gets within 5-10 cents of the midpoint.  Bottom-fishing at 'D' is also suggested if you are able to reduce theoretical entry risk to 12 cents or less for each round lot traded. _______ UPDATE (May 31, 12:46 a.m. EDT):  The whoopee cushion price action this week has put into play a lower target at 188.03 that would become a lead-pipe cinch if the stock closes beneath its p sibling at 193.05. _______ UPDATE (June 3, 5:10 p.m. EDT): The low of Friday's nasty selloff came within 57 cents of the 188.03 target flagged above. It remains viable and can be used by Pivoteers for cautious bottom-fishing, but if the hidden support fails we'll be looking at more slippage over the near term to at least 182.36 (240m, A=208.92 on 5/3, and B=193.20.) _______ UPDATE (June 7, 9:59 a.m. EDT):  Off a low of 187.00, Big Blue has launched into a take-no-prisoners short squeeze marked by gap-up openings on the last two days. The bigger picture still looks bearish and will remain so until such time as buyers push this vehicle to 198.30.  For the moment, however, we'll back away.

After May's hellish, thousand-point slide, the broad averages have been doing their best to test the patience of bears who thought life would be easy once stocks began to fall in earnest. In fact, after two weeks of feints, dives and half-bounces, traders' patience may be starting to erode.  This could provide fuel for one last head-fake, but once it's over, the Indoos will find it difficult to avoid fulfilling the C-D 'destiny' of the initial, impulsive breakdown. There's also the possibility that they'll fall straightaway, no head-fake. If this should occur, we could look for the initial plunge to come down to at least 12153, the p midpoint of the pattern shown. _______ UPDATE (June 3, 4:14 p.m.):  The Dow shredded the midpoint support noted above so effortlessly that further slippage to its 'D' sibling at 11585 now appears likely.  More immediately, the 11954 target of a lesser pattern (5-min, A=12490 on 5/31 at 3:40 p.m. EDT, B=12191 on 6/1 at 10 a.m.) can be used not only as a minimum downside objective for the near term, but also as a benchmark by which we'll be better able to judge the level of fear in the market. (Of course, it can also be used to bottom-fish or to take profits on an existing short position.) An easy breach of this Hidden Pivot support would be warning of panic selling to come. Alternatively, bulls would need to muster a thrust to at least 12724 over the next couple of days to mount a credible recovery. UPDATE (June 7, 10:03 a.m. EDT):  Set a screen alert at 12722.64, since that's when this so-far hoax-of-a-rally would become semi-legitimate.  That's a tick above a look-to-the-left peak recorded on the opening May 16. _______ UPDATE (June 13, 7:30 p.m. EDT): The hourly chart has

Friday's impressive surge brought this vehicle to within a hair of the 447.16 target we looked at during a recent online tutorial session. That is neither bullish nor bearish per se, but it wouldn't take much more to re-fortify buyers for a sustained move. Specifically, bulls need only hit 458 to knock off five prior peaks on the hourly chart. These are shown in the inset, along with last week's push to D=447.16.

After mucking around for three weeks, Silver's intraday charts went mildly impulsive with Friday's robust surge. However, bulls will have an excellent opportunity to shift into high gear when the new week begins, since it would require only a modest rally to blow past four prior peaks on the 480-minute chart (see inset). If and when this happens we can use the 32.280 midpoint resistance of the big pattern shown as a minimum upside objective for the next 2-3 weeks. More immediately, camouflage for belated buying will be difficult to come by following last week's impressive finishing stroke.  My suggestions is to leverage a b-c pullback from just above any of the several peaks discernible on the 30-minute chart going back to May 18.

The bottom of Friday's plunge fell an inch from the 1272.00 midpoint support flagged in the update I posted intraday.  This corroborates and affirms the pattern itself, along with its 1209.75 'D' target.  We may infer that a further decline to that last number is an odds-on bet if p is decisively breached (which in this case means by more than 2.00 points). Meanwhile,  I would expect DaBoyz to play it gingerly Sunday night in order to create the impression that no panic impends.  They might succeed if the news environment is not too bad, but any rally would be a short nonetheless. Since I'll be traveling back to Denver on Monday, I'll leave it to Pivoteers to find a painless way to get aboard.  Suffice it to say, we should expect rallies of all degree to fail at either their p midpoints or d targets.

July Crude will have a chance to pull out of its tailspin at 80.55, the 'D' target of the pattern shown.  It looks like a good place to attempt cautious bottom fishing or to hedge a short position held during the decline. Keep in mind, however, that, barring some black swan event in the Middle East, my expectation is for much lower prices -- perhaps 50 percent below current levels. The likely cause would be a combination of global recession/Depression and the washout speculative forces in commodities. _______ UPDATE (June 7, 10:08 a.m. EDT):  A quite strong dead-cat bounce (and that is almost surely what it is) has occurred off an 81.21 low. Its first test will be the 87.47 Hidden Pivot target of the pattern (240m) A=83.31, B=86.27, C=84.51.  An easy move through D would portend more upside over the near term. _______ UPDATE (June 14): The  dead-cat bounce hit 87.03, 44 cents shy of the midpoint resistance I'd noted, before collapsing two days later to a new low at 81.07.  Much lower prices impend, and so all positioning should be from the short side.  Camouflage tactics can help us get short even when corrective rallies do not quite reach their targets as occurred this time.