Wednesday, August 8, 2012

To stretch the bearish imagination (and also the bullish one), I've included a Dow Industrials tout for today that references a rally target above 14000.  The pattern yielding that objective looks oh-so-plausible, and so we should keep it well in mind whenever grim headlines tempt us to think the world is about to end.  Click here if you’d like to try Rick’s Picks free for a week, including a chat room that draws traders from around the world 24/7.)

The QQQ chart looked so strong when we examined it during yesterday morning's tutorial session that we segued to the Dow's charts to see whether there were any corresponding signs. What we found was a quite plausible bullish pattern that projects to as high as 14142, a 7% rally from these levels.  Especially interesting is the apparent consolidation following a brief flirtation with the pattern's 13089 midpoint.  The Indoos are now above it, having seemingly broken out, and we should keep this well in mind before we attempt to intercept buyers with short offers.  I'll also note that the last ten or so bars of the chart shown yield a bull target projection of 13386, just above May's high.

The futures went into a shallow dive yesterday morning after failing to reach the rally target of a beautiful camouflage set-up.  This is "dueling" action at best, portending limited potential for traders on either side of the market. The best bet I can see at the moment would be going against the trend on a pullback to the 1598.60 midpoint pivot shown.  That's also a logical number for a minimum downside objective over the near term. Alternatively, we could get just a little bit excited if the futures pop today to 1626.80, exceeding the look-to-the-left peak that I've labeled.  That would strongly imply that the futures are bound for the 1646.90 bull target of the large pattern with purple coordinates.

The futures poked their snout within a few ticks of a lame target at 1404.00, but they apparently were too winded at that point to go for the gusto at 1409.00.  That's a Hidden Pivot resistance, and the more we scrutinized it during yesterday's tutorial session, the more appealing it looked. We'll continue to keep it well in mind for shorting if and when the futures get there, but for now night owls can attempt to make hay with the downtrend shown. Camouflage is suggested if bottom-fishing, since the correction target coincides with a prior low.  UPDATE:  The 1390.50 target shown in the chart caught the exact low of the day. If you got long at the bottom, please let me know in the chat room so that I can establish a tracking position for your further guidance.  Trading on our customary guidelines, you might have one contract remaining from each original four.   Click here for details concerning the upcoming Hidden Pivot Webinar in September (and a $50 discount coupon if you register now).