Monday, November 24, 2014

Ahead of the Holiday, Market Feigns Calm

– Posted in: Free Rick's Picks

It's early Monday morning, and index futures look like they're already slipping into a trance ahead of the Thanksgiving holiday. If there's significant movement either way this week, seasonality favors the upside. While it's doubtful there would be enough of it to get the S&Ps to my current rally target, we shouldn't be surprised if there's at least a sneaky attempt on non-existent volume.

JYZ14 – December Yen (Last:0.8408)

– Posted in: Current Touts Free Rick's Picks

The chart shown has implications that may or may not prevent Japan from getting sucked into a deflationary black hole. However, the chart is quite clear on the question of whether BOJ will be successful in its longstanding goal of trashing the yen. (Answer: Yes, very.) The small rally in early October from around 0.9001 validates the pattern itself, and the decisive progress beneath that level since implies that the D target at 0.7332 is likely to be reached. This will obviously benefit Japanese exporters, but it will also put more pressure on manufacturers in the U.S. and elsewhere that compete with them. Traders should position from the short side until the target is reached, but be alert for a rally back up to the red line, since that would set up a 'mechanical' short to the target using a 0.9418 stop-loss. That's far more than we would ordinarily risk, but you could cut it down to size by using the 'camouflage' technique. When appropriate, ask in the chat room if you're uncertain about how to do this. ______ UPDATE (December 9, 8:03 p.m.): I've switched to the March contract with an intraday chart (see inset) that shows a robust rally beginning from above an 0.8183 correction target. Although there are outstanding targets well below these levels on the longer-term charts, we should pay heed to any rally that begins as this one has. While it's true that the rally failed to clear the external peak at 0.8493 recorded on December 1 -- a mild sign of timidity -- we'll give buyers more time to see if they can summon some real gumption. _______ UPDATE (December 10, 6:09 p.m.): The slight penetration of a midpoint resistance at 0.8476 suggests that this dead-cat rally will continue to at least 0.8613. _______

GCZ14 – December Gold (Last:1196.80)

– Posted in: Current Touts Rick's Picks

The rally pattern shown should be etched into your brains by now, since progress toward its 1232.00 target has been glacial.  Assuming the futures eventually get there, my hunch is that it will require a pullback to the red line (1203.00) from somewhere between 1210 and 1220 to get sufficient running room for the final ascent.  Although there is not much excitement in this prospect, there are potential gains for anyone patient enough to monitor tradable ABC patterns on the very lesser charts. _______ UPDATE (2:05 p.m. EST): I expect a dull week, but if December Gold rolls down from here without having exceeded 1207.60 to the upside, a 'midpoint Hidden Pivot' support at 1145.00 would come into play analytically. Its easy breach would portend yet more downside over the near term to at least 1114.60.  Regardless, 1145.00 can, and should, be bottom-fished with a stop-loss as tight as you can abide.

ESZ14 – December E-Mini S&P (Last:2070.00)

– Posted in: Current Touts Rick's Picks

The 2115.50 target identified here earlier is a logical minimum objective for now, but that doesn't necessarily mean it will be reached. In any event, we'll need to monitor the lesser charts for more finely-nuanced signs of continuing strength -- or perhaps incipient weakness. If the 2064.25 high endures overnight, look for any downtrend to find support at or near the red line, a midpoint Hidden Pivot at 2055.50. We shouldn't attempt to bottom-fish there aggressively, however, since it coincides with 'structural' support that will be on other traders' radar.  Ditto for the D target at 2046.75, although either -- especially the second -- could yield the kind of subtle abc reversal that we look for to initiate risk-averse entries. _______ UPDATE (10:23 p.m. EST): Night owls should check out the new chart, since I've sketched out a potentially tradable scenario. The bigger picture, detailed above, remains unchanged. _______ UPDATE (November 25, 9:41 p.m.): Zzzzzzzzzzzzz.

Why the Plunge Protection Team Loves Fridays

– Posted in: Commentary for the Week of March 8 Free

The Plunge Protection Team has been hard at work lately, although not in the way some traders might imagine. The very name evokes the shadowy activities of a group of Svengalis believed to control the stock market through timely interventions in such key trading vehicles as the S&P 500 futures. In fact, the PPT, more blandly known as the President’s Working Group on Financial Markets, was commissioned under President Reagan after the 1987 Crash to prevent meltdowns. These day, however, nearly six years into a ferocious bull market that seldom pauses for breath, one might question why a Plunge Protection Team is needed at all. The answer is that the PPT, far from defending against selling panics, has been furtively on the offensive, triggering short-squeeze panics that spike shares to new record highs at every opportunity. Usually, the news catalyzing these rallies hits the tickertape on a Friday, when the effects of a short-covering binge are apt to be most pronounced. It is hardly a stretch to imagine that these engineered events have been scheduled and coordinated by the PPT, working in concert with the central banks. Last Friday, for instance, U.S. stocks opened with a ballistic lurch higher on news that China, increasingly fearful of deflation, is about to ease. This had already sent stocks in Europe and Asia screaming overnight, setting up Wall Street’s by-now reflexive reaction. Recall that just five weeks earlier – on a Friday, as it happened – Japan announced its own, epic stimulus package – Max Keiser wryly called it QE9 – to the same effect: stock markets around the world soared. A presumably intended side-effect was that U.S. T-Bond prices spiked higher, briefly pushing yields down to lows that will linger in investors’ collective subconscious with a sedative effect against whatever fears they