Friday, January 4, 2013

Someone declared in the forum that the long bond was tanking, but "correcting" is more accurate from a Hidden Pivot perspective. On the daily chart, based on the clear and compelling pattern shown, the March contract could come down to 143^16 without evincing even a whiff of bearishness. That would merely extend the tiresome series of ups and downs -- an apparent consolidation -- that has been dragging on since last summer.  Notice that a larger pattern shown in an inset allows a corrective move all the way down to 141^19.  As a practical matter, we’d need to watch things closely at that point, since any downtrend that exceeds an obscure and seemingly unimportant May 10 low at 142^18 would be bearishly impulsive on the daily chart.  Click here to sample Rick’s Picks free for a week, including daily trading ‘touts’ and access to a market-savvy chat room that goes round-the-clock.

The strong rally that unfolded over the summer was not impulsive on the weekly chart, and if you display it one the daily it becomes merely a "duel" between bulls and bears, with alternating impulse legs in either direction.  What this implies is that we shouldn't get too excited if HUI embarks on a sharp rally over a stretch of perhaps 3-4 days.  Even so, we can treat the 491.04 p midpoint resistance of the pattern shown as real, and even look for a camouflage entry opportunity on the long side if it's decisively penetrated.  If you're not that patient, it will still be possible to enter more or less at will, leveraging bullish impulse legs on charts of lesser degree well before the midpoint is reached. Since the entry signal at x has already been tripped, your trading bias should be bullish anyway. _______ UPDATE (January 13 at 1:22 a.m. EST): After a pre-Christmas, whoopee cushion bounce from around 420, this vehicle settled back into a rut. Now, however, it is bullishly impulsive on the hourly chart, with immediate potential to 442.99 (see inset). This target will  become an odds-on bet if and when buyers push HUI past its sibling midpoint at 435.69.

The ambitious 1494.50 rally target shown looks like a lock-up, given the gap through its p midpoint sibling at 1438.50 on Wednesday. Since all price action that has occurred since is presumptive consolidation, we should look for our camouflage entry opportunity at the midpoint support -- or possibly the D target -- of any lesser corrective patterns that occurs today or Monday. I'd suggest focusing on the three-minute chart, which at this moment is developing an abcd pattern with a 1450.25 midpoint and a D target at 1445.50 (a=1460.50 on Jan 3 at 1:54 p.m. EST; b=1450.00 on Jan 3 at 3:39 p.m.) ______ UPDATE (January 7 at 12:41 a.m. EST): Late Sunday night, the futures were entering their fourth day of a tedious consolidation.  Our trading bias is bullish, and I would suggest using the 15-minute chart to find an impulsive rally worth buying.  Camouflageurs can drop down to the three-minute chart in search of a smaller pattern with an 'x' entry trigger, but make sure that the larger pattern (i.e., on the '15') meets the single-bar rule.

[The guest commentary below is the second we’ve published from James Tolard, an old and dear friend as well as a supremely gifted commodity trader.  Jim’s style is to surf the big trends, trading just a few times a year. He lives in a rural area outside of Paris, but we’ve coaxed him out of semi-retirement to write occasionally on an eclectic range of subjects suited to his deep intellect, worldliness and wit. This time, he is sharply at odds with our own, very bearish outlook for 2013. We have no qualms about sharing his thoughts with you, however, because Jim’s against-the-grain instincts have been right far more often than our own. RA] One of the things that baffled me all summer, and into the stench of the campaign finale, was the supposedly odd “friendliness”' of the U.S. stock market and the weakness of the dollar.  I was fairly bullish on stocks going into October, for a surge to – sit down for this -- Dow 20,000!  But as October pulled in with a screech, and elections just a month away, I am old enough to have expected little good from either the Ides of March or those of October. So, I blushed, backed off, and decided to let the market tell me what kind of correction or sell-off it might need. Now, contrary to all emotional expectations, we are facing the real possibility that a strong run-up may well launch in the coming weeks. So, assuming that I am going to be right, what do I use to support my arguments? First is the low borrowing rate. While the normal person or even smallish business cannot borrow 3% or less, large firms can. The banks are still re-building their reserves and doctoring their balance sheets, so they are holding