Thursday, June 13, 2013

The chart shows a picture of a stock that just doesn't want to go down. Two incipient C-D legs have now reversed shy of their respective midpoint pivots, and we should therefore infer that if and when the broad averages turn higher, TSLA is going to lead the charge. Traders should seek opportunity on the 15-minute chart, where you can see how yesterday's selloff into the close was merely the b-c correction of a robustly bullish impulse leg.

The midpoint support of the pattern shown has yet to be breached, but if and when that occurs it will open the sluice gates for a selloff equivalent to about 330 Dow points.  We won't speculate by jumping on put options immediately, since no one ever got rich buying puts based on bearish hunches. Instead, we can wait for a rally and try to short the top by buying puts when a Hidden Pivot target is reached.  Stay close to the chat room, or sign up for intraday alerts on your Account page, if you want to be notified of any such opportunities.  For now, though, we'll wait and see whether the 149.55 midpoint pivot holds. _______ UPDATE (June 14, 2:12 a.m. EDT): The turn came from 149.48 -- within just 0.07 points of the pivot -- so we'll consider it unbreached. From that point forward, and for the remainder of the day, nearly every uptrending abc pattern generated an 'x' entry point that would not have gotten stopped out (see inset, a fresh chart).  Under the circumstances, we should trade with the flow here rather than get aggressively in its way.

I flagged a 1587.00 correction target here yesterday, and although it looks like a good bet for bottom-fishing intraday, another Hidden Pivot at 1572.25 posted by 'Sa1' in the chat room looks even more compelling. Look at the accompanying chart and you may find that the eye 'wants' to see a quick resolution of the downtrending abc.  Could the futures drop the requisite 38 points -- the equivalent of about 310 Dow points --  in just a few days?  The prospect hardly seems unlikely, let alone unusual.  Traders should position from the short side, using charts of perhaps 15-minute degree or less to identity opportunities carrying theoretical entry risk of no more than 3-5 ticks per contract.

Well, that’s two straight Tuesdays that U.S. stocks have fallen. Has Wall Street finally noticed that the real estate sector – the only big winner in American’s sham “recovery” besides the stock market itself – is starting to deteriorate?  Hard to say, although lately we’ve had our doubts that yield-crazed U.S. investors would lose a beat even if an epidemic were to wipe out half of the world’s population. They barely flinched a couple of weeks ago when Japan’s stock market was freefalling. And if deepening recession in Europe and a steep drop in China’s output bode trouble head for the global economy, neither factor has yet to have a significant impact on U.S. stocks, which touched record highs as recently as two weeks ago. Now, however, comes a worry that will literally hit investors where they live: a steep increase in long-term yields that has pushed 30-year mortgage rates up by 56 basis points in just the last five weeks.  As our colleague Michael Belkin notes, this is equivalent to two rate hikes by the Federal Reserve. An immediately visible result, he says, is that mortgage applications dropped 11% last week and mortgage lenders are starting to lay off brokers. If home sales start to cool even slightly, we wouldn’t be surprised if the “wealth effect” mirage that the Fed has struggled so hard to create over the last five years vanishes in a trice, since Americans have precious few things these days, other than inflated home values, to make them feel wealthier. (Certainly not higher real incomes, which have stagnated since the 1970s.) From a technical standpoint, T-Bond futures still have a little room to fall before they hit our red zone.  That would imply a drop to around 137-7/32, basis the September contract. (Note: yesterday’s low was