Wednesday, February 13, 2013

I was persuaded by discussion in the chat room yesterday to give Natural Gas futures more coverage, since a contract margined for about $800 would seem to offer a pretty good bang for the buck.  That said, we shouldn't have any illusions about catching a major trend, since this vehicle has been chopping and thrashing within an 80-cent range for more than a year.  That won't prevent our jumping on promising trades via camouflage and trading both sides of the market, however.  For now, that implies zooming down to the five-minute chart, where 'external' peaks nicely suited to our purpose have begun to take shape. The one I have in mind lies at 3.258, and any b-c pullback from just above it could yield the kind of very low-risk entry opportunity we thrive on.  I've sketched it out hypothetically for the benefit of night owls, since this trade has a chance of triggering in the wee hours. _______ UPDATE (10:47 a.m. EST):  The first camo 'buy' signal occurred at 3.264 at around 5:20 a.m. EST. On the 5-minute chart, the coordinates are as follows: A=3.252 (4:40 a.m.): B=3.265 (5:05 a.m.); C=3.260.  You'll notice that point 'C' low blends traits of the 'atrocity' low with what could initially have been mistaken for a fine single bar.  This set-up was good enough for government work, for sure. More seriously, and putting the pattern's point C flaw aside, you will rarely go wrong buying impulsive rallies that are this subtle, especially if you do so early in the life of the new trend.  I am not establishing tracking guidance, however, because of the silly time of day the opportunity occurred, and because of the somewhat dubious provenance of point 'C'.  I've refreshed the chart to show how the set-up developed.

We've staked out a short position in the Diamonds even though there are higher targets outstanding for numerous vehicles track and traded here, including the E-Mini S&Ps, Goldman Sachs and Google. The actual target in the Diamonds is slightly above yesterday's high, but if it gets blown away we hold a bullish position in GOOG that is likely to more than merely offset the loss. Keep in mind that the shorts we are attempting are anything but whimsical. In fact, the DIA target is as compelling as any to be found right now for index-based trading vehicles. As long as we are diligent and niggardly about managing risk, there's a good case to be made right now for shorting any Hidden Pivot rally target that is even moderately appealing.  My gut feeling is that stocks are at or very near a major top. Click here to sample Rick's Picks free.

[Fifty years of inflation has been tough on households, but for millions of college grads unable to find work paying more than $10 an hour, it can be defeating. In the guest essay below, Rick’s Picks forum regular John Skerencack (aka John Jay) explains how an  economic tragedy that has trapped young people took shape without anyone much noticing. Until now. RA] A good way to work a scam is to put a microscope on a short-term trend and pretend it is a reversal of the main trend. “Global Warming,” for example. About 15,000 years ago there was a sheet of ice 5,000 feet thick over New England. As the ice age ended it melted away, and as a result sea levels rose about 390 feet. So you can say with confidence, the long-term trend is melting ice, and rising sea levels. All this happened without any human input at all -- a mile of ice melts, sea levels rise 390 feet. Now, in the past 140 years, more ice has melted, and sea levels have risen about a foot. OMG! Quick, let’s create a global tax expressed through carbon credits to stop it before it gets out of hand and we all drown! Al Gore and the CME have a plan to save us! Cue the one minute chart of sea level rise! You get the picture? There is no new trend of rising sea levels, just the last gasp of the main trend, most likely. Rising Seas = Inflation Turning to the “Dismal Science,” the rising sea levels of the past 50 years or so is Inflation. So ceteris paribus, let 50 years be equal to the 15,000 years of melting ice and rising sea levels. For the sake of argument assume the price of everything has gone