Wednesday, August 13, 2014

Let's make a mental note to buy the stock whenever it sells off hard for a couple of months, as it does every once in a while, since the powerful rebounds that have invariably followed are becoming as likely as tomorrow's sunrise. The next such opportunity should come after TSLA hits the 304.24 target shown, but traders should position from the long side in the meantime while the 17% rally unfolds.  I expect the pullback from 304.24 to be precise, based on the way buyers interacted with the 240.40 midpoint Hidden Pivot.  A pullback to that number should be regarded as a gift to buyers who are not onboard already.

The jury's still out on whether the broad averages are in a bull rally or a dying-cat bounce. Regardless, if you're intent on sticking with a long-term short position initiated near the July top, my advice it to bail out only if the E-Mini S&Ps surge above two prior peaks on the hourly chart without a significant correction. As of the moment, that would imply an unpaused upthrust exceeding the 1956.50 peak-let recorded  July 31 on the way down.  That would be equivalent to a DJIA rally of about 200 points -- barely a day's work if the bull is a feisty as it was a month ago.

I'm not much for head-and-shoulder patterns because they are everywhere the amateur chartist wants to see them.  That said, the one that crude has been tracing out this year is a humdinger, and it looks as though it could descend at least one more level, to around 94, before some serious base-building begins.  Traders using the Hidden Pivot Method don't necessarily have to hold a bearish bias, however, since it's possible to initiate a long position at any time and with relatively little risk by jumping on uptrending abc patterns on the very lesser charts.  If a countertend opportunity does await us, I should think it would occur following a breakdown beneath last May's 95.59 low. Just about everyone would be bearish at that point, but it could prove to be the shakeout that lightens the load for a decent bounce. Meanwhile, the 15-minute chart suggests still-lower prices impend over the near term, possibly after a brief rally for the sake of symmetry.  Maybe not, though, since the short-squeeze rally from yesterday's 95.90 low chickened out an inch shy of exceeding a tiny external peak at 96.82 visible on the 15-minute chart. Not exactly a sign of robust health.