Thursday, February 28, 2013

There have been murmurings in the chat room that the mining sector may have hit bottom, but there needn't be any uncertainty about this. To know for sure, let's stipulate that the Gold Bugs Index exceed two prior peaks on the hourly chart without pausing for breath.  In this case, I am implying that the stock must surpass peaks #1 and #2 in an uncorrected leap before we wax bullish.

During yesterday's weekly tutorial session for Hidden Pivot grads, we found the corrective pattern in the accompanying chart most compelling, with single-bar coordinates at all three ends and a dandy, non-sausage-y point B low.  The 24.71 target is a place where we could contemplate bottom-fish aggressively, but it will also become our minimum downside objective if the stock cannot muster an impulsive breakout above the red line.  My hunch is that the stock's a goner here and that the implied 8% fall will commence in earnest unless a powerful rally in the broad averages pulls it the other way. Even then, only an impulsive move on the daily chart should be regarded as strong enough to negate the downward pull of the 24.71 pivot. 

I've created a "matrix" of rally targets to go along with today's DJIA tout. It shows at a glance what could happen if yesterday's high -- itself just a few points above a compelling target at 14098 -- is exceeded. An alternative top lies not far above, incidentally, so check it out if you're keen on shorting this flying pig with a very tight stop at every logical opportunity.

It creeps me out to think that if the Dow breaks out here, our next logical target would be somewhere up around 15000.  Fortunately, there are several lesser upside targets that comport more easily with the not unattractive idea that the broad averages are close to the Mother of All Bull Trap highs.  Assuming yesterday's top at 14105 gives way, a Hidden Pivot at 14142 is my favorite of the bunch, probably because a mere 70-point rally from Wednesday's settlement is all it would take to turn the last few holdouts super-bullish. Today's chart shows not only that target, but several more, each persuasive in its own way, along with their respective midpoint resistance pivots.  I have used a separate color for each pattern, and you should consider the chart as a whole a "matrix" of the kind discussed in the final hour of the Hidden Pivot Webinar.  Trading the various price points will be up to you, but each will probably be worth at least the small risk incurred in doing so via camouflage.  Fills should be reported in the chat room if you want me to track positions, whether long or short.