Wednesday, April 9, 2014

Although we sometimes look to trade this monster on Fridays using expiring weekly options, the bullish pattern shown has enough clarity to loosen up a little and trade it midweek. As you can see, there is decent 'camouflage' cover to be had without zooming down to the one minute chart. This 10-minute picture contains an impulse leg subtle enough (see inset) to have generated an entry signal that would have attracted few competitors. It also was ideal for a 'timed' buy-stop entry, where one jumps into the position and gives it perhaps 15-30 seconds to go into-the-black before bailing out. ______ UPDATE (10:27 a.m. ET): A hawk-eyed subscribers has noted in the chat room that Priceline topped this morning within pennies of the 1205.46 target of the pattern shown in the chart (the target itself had been left unspecified; the subscriber simply worked the numbers).  Although the pattern played out exactly as anticipated in the chart, the rally was tradable only if you were awake and very alert overnight. Would it have been worth it to slog through hours of tedium?  Judge for yourself: 400 shares entered at the implied 1186.55 entry price shown would have produced an overnight profit of $8000 if you exited at the target.

June Gold looked bound for a minor rally target at 1316.50 when the music stopped yesterday.  However, bulls were acting feisty in off-hours trading, presumably raising their sights to the 1431.10 target shown (see inset). As you can see, they were just a tick shy of tripping a buy signal at 1315.90 when we went to press, and any 'camouflage' trades initiated from that price or higher should therefore have a bullish bias.  Resistance is likely to be apparent very near the 1354.30 midpoint, but if the futures trade 1.50 points or more above it intraday, or close above it, they would greatly shorten the odds of a further push to 1431.10.

Over the course of this bull market, now entering its sixth year, stocks have seldom stumbled for more than two consecutive days. Credit nervous bears, who have grown increasingly eager over the years to cover shorts for piddling gains.  Although few things in life are certain, we know for sure that one of these days they are going to cover their entire short positions on a day stocks are falling hard, only to realize a few days later that the avalanche had only just begun.  Another mistake they will make is that, when attempting to short anew, bears' offers will be stranded by rallies that don't quite reach their anticipated heights.  Will yesterday's feeble short-squeeze turn out to be exactly that? If the question were that easy to answer, we'd all be rich.

There was nothing impressive about the wheezy, short-squeezy spasms that produced yesterday's very modest gain. The biggest rally of the day was accomplished by running stops placed beneath Monday's low. With few bulls still on board at that point, it required little volume to goose the futures into a 17-point waft. This little game was being repeated in after-hours trading Tuesday night. Notice in the chart (see inset) how the low of the rally was a single tick beneath a low made three hours earlier.  Again, this shook out the bulls, lightening the load for the rally that has ensued. But as of around 8:30 p.m., DaBoyz had extracted a gain of just 6 points for their troubles, casting sufficient doubt on the veracity of the rally to shorten its life span.  Night owls should pass up a second chance to short this dud at 'p', but if DaBoyz wax bold and push this hoax to the 1857.25 target, you can short there with a stop-loss as tight as 1.00 point. _______ UPDATE (10:03 a.m. ET):  A new B-C has shifted the target north to 1859.25.   It feels doubtful that DaBoyz can muster the wattage to reach 1859.75, so any shorting should be down with-the-trend. I'd further suggest zooming down to the 5-minute in search of  'camouflage' opportunities.