January 2014

The curiously orderly gyrations of the past week have thus far held above a crucial low at 1754.00. Its breach would create a technical storm cloud that we haven't seen in a long while -- i.e., a bearish impulse leg on the daily chart. My gut feeling is that the mess will resolve to the downside, but that the next important low will set the futures up for a rally to new record highs. We'll be better able to judge the likelihood of this once we've seen this vehicle either break down, or break out (ever so mildly, to start with, via a push on the hourly chart above above 1816.00).  For the time being, however, the E-Mini is for day traders only.

Yesterday's rally stopped just shy of the 1272.50 threshold where I'd said bulls would keep short-term momentum alive.  Instead, they will now have to depend on a mild correction to signal that all is well -- or at least, not unwell. In Hidden Pivot terms, 'mild' here means a C-D leg that reverses from the midpoint Hidden Pivot or above. So that you can visualize this, I've sketched out a hypothetical scenario that would imply renewed strength as next week begins.

At one point yesterday, virtually all of the hot stocks and high-fliers that I track were 'in-the-green'.  In saner times, when shares were driven by actual investors rather than by algorithms programmed to throw limitless sums of Other People's Money at the market, we might have expected such an excess of overbought zeal to produce a nasty reaction. Not any longer, though. Check out GOOG's hourly chart (inset), which shows buyers tripping over themselves to avoid missing the next monster leap. Indeed, there appears to be sufficient momentum in yesterday's short-squeezed spasm to suggest that buyers won't rest until they test the all-time high near 1170.  Evidence of this is strongest in the fact that the selloff did not even reach the 'hidden' support at 1086 (red line) where we would typically look for a corrective move to reverse. So what's next? Hidden Pivot analysis suggests GOOG will reach 1192.12 with the next manic leap. That would become an odds-on bet if the stock can close for two consecutive days above the 1136.69 midpoint pivot associated with the target itself.

Sometimes a trend is so strong that every entry signal produces a profit. This implies that trades initiated at ‘X’ achieve their respective midpoint pivots, at least, without having to create a second point ‘C’. For successful traders, the trick lies in knowing which days such conditions will obtain. In this lesson, we considered some instructive set-ups in LinkedIn (LNKD) where it was possible to predict, from the opening bell, that everything would be going our way.

The rally sputtered out a point-and-a-half shy of a midpoint resistance at 1802.75 that we were using as a minimum upside target. The consequences were worse than I might have expected, and bulls appeared to be hanging on the ropes when the bell rang. If they are still on the defensive when stocks open Thursday morning, look for the selloff to continue down to the 1740.25 target shown. That Hidden Pivot can be bought cautiously, with or without camouflage, but you can be more aggressive if you've been short for the ride down.  For some timely tips on how to get short, Pivoteers should review the recording of the latest tutorial session as soon as it is posted. (It should be up by no later than Thursday morning.)

Facebook is falling hard after having failed by a whopping $3 to achieve a long-term rally target at 62.36. This is the most bearish price action we've seen in the stock in a long while, and if the selling were to continue without a significant upward correction this week, we could be looking at a fall to 47.82 over the near term.  That would equate to a 20% correction from the all-time high -- one that is probably long overdue.  Although the stock looks like a short from these levels, I'd be an aggressive buyer at the target, if only because there is always the possibility Facebook will stumble onto a new paradigm for monetizing all those eyeballs. Keep in mind that the data they are already gathering on subscribers is widely viewed as the best in the business -- valuable because it is enriched with detailed personal information supplied by users themselves. Personally, I find little value in Facebook and only rarely check my account. But others I know practically live on the site. It may be dying with young people, but there are still many hundreds of millions of subscribers left to be reached and marketed to. _______ UPDATE (10:03 a.m. EST): The crime syndicate whose turf includes this stock showed us who's boss this morning with a spectacular $9 short-squeeze to a so-far high of 62.30.  The (temporary) bad news  for them is that the rally has stalled just 0.06 from an important Hidden Pivot target at 62.36 (derived, quite clearly on the hourly chart, from these coordinates: A=36.02 (8/15); B=54.83 (1o/18); C=43.55 (11/26).

Subscribers who legged into the Feb 7 155-158 put spread a while back were able to cash out of a third of them yesterday for a gain of $480 or better. Since the Dow looks like it's about to fall a further 220 points, you may have an opportunity to cash out at even better prices. For specific details and a precise target, check out today's update for the DIA tout. Subscribers who have access to the recorded tutorial sessions should audit the latest addition to the library, since it contains an illuminating discussion of how to catch the easiest trade of the day -- i.e., the one that surfaces amidst chaos and fear in the opening minutes of a session.  Click here for information concerning the upcoming Hidden Pivot/Camouflage Trading Webinar and receive a $50 discount coupon - Use Code 7D5629.

The spectacular gap left on the charts by yesterday's cliff dive (see inset) is going to pose formidable supply problems for DaBoyz -- but also for the stock market as a whole, since Apple is one of the largest companies in the world based on the value of its shares.  Although we can't rule out the possibility that this is yet one more shakedown, and therefore a buying opportunity, it has real causes, including intense and increasing competition for smart-phone sales. We'll know better whether it will take weeks, or perhaps months or longer, for the stock to get back on track once we've seen what kind of follow-through (C-D) leg bears are able to generate. If bulls are going to romp in 2014, the downtrend should reverse from the 'p' midpoint pivot of the follow-through leg.

We'll use the minor rally pattern shown, with its 1811.00 target, to determine whether the recent, 80-point decline was as much relief as bears are going to get. Night owls should note that a minor buy signal has already been tripped at 1798.75 (see inset).  Now, if buyers can push past the midpoint pivot at 1802.75 without difficulty, the 1811.00 objective would become a lead-pipe cinch. Anything above 1811.00 would exceed external peak #1, refreshing the bullish energy of the lesser charts for, presumably, the remainder of the week.