Friday, April 26, 2013

We're long a single contract from, effectively, 1427, using an impulse-leg stop-loss that will give us a better chance of weathering adverse swings than a conventional stop-loss.  I'd suggested using the 10-minute chart for this purpose, but it has grown too tricky tonight and I will therefore suggest zooming down to the 5-minute.  To illustrate, at this moment, it would take an uncorrected downdraft exceeding  the 1470.30 low to pop us out of the trade. _______ UPDATE (11:19 a.m. EDT): Subscribers who followed my advice and exited overnight on the stop would have booked a $4300 profit for a one-day hold.  The 1507.20 target given here earlier remains viable and is very likely to be reached, or at least closely approached. But don't expect anything more than that until the futures have rested thoroughly, since there is also an important Fibonacci-based resistance at 1505.00.  A rally to that number would represent a 0.618 retracement of the down-leg, visible on the weekly chart, from 1618.30 (3/22) to 1321.50 (4/19). Taken together, the two rally targets are likely to exert a magnetic pull on this vehicle, and that's why I say the target(s) have a good chance of being fulfilled over the near term.  Please note that although we'd held a long contract from, effectively, 1427 with the goal of "swinging for the fences," I found myself unable, as ever, to toss the basics of risk management out the window. As a result, we wound up swinging, merely, for extra bases and hit a double.  FYI, a less gutsy approach, using a 'dynamic' trailing stop and the 1:3 risk/reward ratio that I advise for all trades, would have popped us out of the trade near 1477.  That's because, based on the so-far high of 1484, we had about 21 points of profit

This bellwether is losing altitude after struggling for a year to stay aloft. With the world slipping into synchronous recession, it's a wonder CAT has held up as well as it did.  From a technical standpoint, the series of three successively higher points 'C' makes the 68.18 correction target less than reliable; however, it'll have to do for predicting the extent of the next tumble, since it's all we've got.  More immediately, there appears to be a struggle at the 83.94 midpoint support, perhaps imagined, but we should infer that the next down-leg is imminent if the stock closes below that number for two consecutive weeks.

The tiresome conniptions of the last week have registered only dimly on the hourly chart, and not at all on the daily.  I've set an alert at 426.62 to wake me, since that's where bullish impulsiveness begins on the very lesser charts. If you're in love with the stock and fancy jumping back in at the first opportunity, I'd suggest using the look-to-the-left peak at 417.15 to set up a camouflage entry signal. The number is not really a peak at all, at least on the 10-minute chart, but I expect it would become one if we zoomed down to the 5-minute bars or less. I didn't do so because it would require a too-tight scrunching of bars to display all the information that is relevant to our needs.

The futures missed a 1589.00 rally target given here yesterday by three ticks. Fortunately, that didn't deter an intrepid camouflageur who goes by the chat-room handle 'Davis' from getting short a few points off the top. He reported taking a partial profit one point below the 1585.75 entry price, then taking a single contract home after the bell.  We wished him good luck. Luck aside, with the Mother of All Bull Traps now in its fifth year, getting short will always be grabbing a tiger by the tail. Davis' trade has the potential to rack up an additional 7-point ($350) gain, based on the target shown (lower green line). however, judging from the bounce the futures got from the 1578.50 midpoint, it's not going to be easy money. _______ UPDATE (10:54 a.m. EDT):  With one 4-point rally interrupting overnight, the futures bottomed exactly at the 1574.50 target shown in the chart.  Since then, they've been in a headless chicken dance that was verging on taking out the low. Want to join in the fun? Click here for a free trial subscription that includes daily touts and access to a 24/7 chat room that draws experienced traders from around the world.

Our friend Chuck Cohen, a gold timer with a proven gift for knowing when to bet against the crowd, phoned the other day with urgent advice. Almost no one sees it coming, he said, but bullion is getting ready to explode. “It’s time to jump in head-first!”  Chuck has been wrong before, and we’d all but tuned him out for the last eight months or so, since his bullish drumbeat went against the asphyxiating weight of bullion charts that have shouted “lower” since last October.  Now, he says, the winning bet is to be short stocks and long gold and silver. Will he be right? From a technical standpoint, it’s still too early to tell. To be sure, some key vehicles, including gold futures and the Gold Bug’s Index (HUI), have turned higher from levels that coincide with Hidden Pivot correction targets of our own. But the bounce so far, especially in Comex quotes, seems tentative at best. Moreover, this is occurring at a time when  the juggernaut of deflation is threatening to overwhelm the central banks’ desperate efforts to thwart the collapse of a quadrillion dollar financial-asset bubble. All things considered, we’re inclined to give Chuck the benefit of the doubt right now.  Here are some persuasive points that he makes: Sentiment indicators suggest that gold is the leper of the investment world, with Rydex bulls currently at an astounding 2%. Shares of mining companies with real gold and silver in the ground, juniors in particular, have collapsed beyond the point of despair. As the price of paper gold has fallen in recent weeks, physical supplies have tightened sharply. Mining-share options are trading at giveaway volatilities. In addition, Chuck notes some troubling signs on Wall Street: Bull-mania has been brazenly flouting weaker corporate earnings, stagnant incomes and fizzling retail