December 2008

The minimum, 20-cent stop-loss advised would have sufficed for those who bought the 43.58 Hidden Pivot given here yesterday. Use a break-even stop until 44.18 is reached, and then a 30-cent trailing stop from 44.38 to the objective, 45.08. _______ UPDATE: You could have exited the position around 6:30 a.m. as high as 44.47, but no worse than 44.17 if using the suggested trailing stop. Minimum gain for the overnight hold would have been $590 less commissions. The subsequent breach of the low implies Crude is bound for 39.28, my worst-case target for the near term. FURTHER UPDATE: A chat room denizen who actually attempted the trade informs me that a 20-cent stop-loss would not have worked, since the low was 43.36, not the 43.38 reported by TradeStation.

We hold a January 90 call for 2.34 -- a modest play on the market if widening expectations of a prolonged rally materialize. In recent days I've named five great technicians who are looking for one, although I remain skeptical myself; the moreso because each day, the list of bulls, or at least the number of chartists who see little chance of another big selloff any time soon, seems to to growing. For now, do nothing further, but be aware that Big Blue could drop to as low as 75.37 after rallying this morning to around 78.18.

The pattern show in the chart speaks with authority because of the precise delicacy of its ABC coordinates, and because of its labyrinthian obscurity. It projects downside to 717.30 (see correction note below), which would amount to a 6% slide from these levels. The Hidden Pivot midpoint is 755.20, and you could bottom-fish there with a very tight stop-loss, since it is as likely to produce a tradable bounce as the 'D' target itself. _______ UPDATE: So far this morning there has been one bounce on the way down, from 757.20, but the midpoint pivot noted above evinced no support at all and would have been a small loser for anyone attempting to bottom-fish there as suggested. The futures subsequently rebounded to play toe-sies with the midpoint, but the damage was already done, hinting of more weakness to at least 717.30. This target has been corrected to reflect my misreading of point B, which is 761.80, not 765.00.

Look for a way to short this vehicle for a possible 50-point ride. If you're rolling out of bed around midsession and the move is mostly over, consider bottom-fishing at 797.25 with a stop-loss as tight as 1.25 points. The trade should not be attempted in the final 45 minutes; nor, in any case, should you take the position home over the weekend. (Note: Night owls could try bottom-fishing at 834.25, stop 833.50 (!), but don't look to milk the bounce for more than 3-4 points. _______ UPDATE: Like Gold, the E-Mini S&P blew past the midpoint support, subsequently bouncing back up to it to play toe-sies. The 797.25 pivot is now my minimum downside target for the near term.

Some years ago, when China began to ramp up its export economy, we predicted here that the country would continue to export aggressively even if global trade fell off a cliff. The result, we wrote, would be historically unprecedented deflation in the manufacturing sector - plummeting prices that would make it all but impossible for even the strongest exporters, including Germany and Japan, to make a profit. China would continue to glut down-and-out consumers with exports because the alternative - sending tens of millions of assembly line workers back to the farm - was unthinkable. Turns out we were wrong and that the unthinkable is happening. Responding to the worst downturn in international trade since the 1930s, Chinese factories have cut back sharply or shut down, and the workers are being left to fend for themselves. Unfortunately, they do not have the kind of safety net that U.S. workers enjoy -- no jobless benefits, no food stamps, no Medicaid, no welfare. Even worse, the farm jobs that they left no longer exist, since much of the land has been leased to agribusiness. Not that the migrant workers would be much better off if China had not promoted the consolidation of farms in recent years. In fact, there was never enough arable land in the first place to support a large work force, much less make farming pay well enough to bring affluence to the hinterlands. Notes the Wall Street Journal: “China has roughly the same amount of farmable land as the U.S., where only 2% of workers are employed in agriculture. But China has some 730 million rural residents --- more than twice the entire American population.” The article was headlined, China Fears Restive Migrants/As Jobs Disappear in Cities. The picture is quite grim, since there is nothing to suggest

By day's end the Indoos had pushed into the no man's land of Monday's opening gap, increasing the likelihood that the 700-point selloff will be come to be viewed as mere noise by week's end. Wake me when 9160 is hit, since, as yesterday's commentary emphasized, nothing less than that will mean anything, Hidden Pivot-wise. Keep in mind that the rally would have to be uncorrected between 8831 and 9160 to earn our coveted bullish seal of approval. More immediately, the breach of an 8605 rally target (see chart) portends more strength into Thursday morning.

Apple looks bound for 102.60, a Hidden Pivot that we can attempt to short using puts or calls. I'll post more detailed real-time guidance if and when the stock gets there, so keep your bulletin launcher switched on if you'd like to be apprised. Meanwhile, a pullback to the 94.55 midpoint associated with the target should be viewed as a buying opportunity, catch-as-catch-can.

Watching the E-Mini S&Ps waft higher during yesterday's tutorial session, we saw a pattern play out to the exact tick. That top was exceeded four hours later following a quite nasty pullback, just as it was exceeded in this vehicle as well, simultaneously. A new target at 8701 beckons magnetically, and it can be leveraged, long or short, as you please. I have reproduced a chart that shows its provenance, and some eagle-eyed pivoteers may notice that the high that I've called 'B' has failed to take out anything along the wall to the left. I am just a sucker, I guess, for those single-bar A's, B's and C's.

A Hidden Pivot at 880.75 is equivalent to the one given as a minimum upside projection today for the Mini-Dow. The relevant point 'B' is as phony as the one I've countenanced in the YM -- but it, too, has those seductive single-bar price points. My Bluefin partners refer to B's that lack a look-to-the-left peak/low as "sausage B's" -- as in, you don't want to see how legislation, or sausages, are made.