June 2009

Entry should be early in the newly developing trend – ideally, the first point ‘x’ of an abc pattern on the 1- or 3-minute bar chart Impulse leg/ABC rules should meet the most stringent requirements: no sausage ‘Bs’; single-bar a/b/c; one-off ‘A’; and a clean move through at least one prior internal and one external Pattern of point ‘X’ entry should be the same directionally as ABC that is one or two degrees higher Position will usually be initiated with more than one contract, since all camouflage entries seek to “catch a wave” on a trend larger than the minor abc used for trend-wise entry. Point ‘B’ should have surpassed the two requisite prior highs/lows, but not some more obvious visual prior high or low that the crowd will be using as a breakout point. Once you have mastered "camouflage," you will find that entering with-the-trend is not so difficult as you may have imagined.

From time to time, when we spy low-hanging fruit, we will offer a Pick of the Day. The goal is to provide very easy trades that will effortlessly make you back the cost of your subscription so that you can enjoy Rick's Picks at no cost. They are for traders of all levels of experience, but particularly for discouraged novices who have never cashed a winning ticket on puts or calls. These trades have seldom been losers, but I'd rather you trust the memory of a subscriber who got nipped for a C-note blindly following my advice before you take the plunge.

July Coffee's run-up yesterday evinced the kind of power that is persuasive even on the one-minute chart.  The rally could have called it quits below the 138.65, but it summoned that crucial extra ounce of gumption to take on the last impediment in its path. Now, assuming the end-of-day pullback low at 137.40 holds, we should expect a resurgence over the near term to as high as _____.  Odds of that occurring would shorten if buyers easily surmount that _____ midpoint associated with the _____ Hidden Pivot.

From a  Hidden Pivot standpoint, yesterday's damage was muted because the dive did not exceed the look-to-the-left cluster of lows shown in the chart.  My outlook for the (Wednesday) night session will therefore be cautiously bullish, although opportunities for night owls to get long appeared limited. Practically speaking, you'll need to drill down to the one-minute chart before you can find any prior peaks that would be usable for a "point X entry" with-the-trend. The first that is as yet unused lies at _____, but by the time the futures get there, any camouflage would be compromised.

The Dollar Index narrowly missed creating a potent impulse leg on the hourly chart, although the rally did get past the two prior peaks we require at a minimum for a show of strength and/or a trend change.  This could be the subtle beginning of a much more significant rally, however, so we'll continue to monitor DXY very closely. Those who are like to trade currencies should follow along diligently.

Notice in the chart how all three of the Indoo's vital ABC coordinates are single-bar affairs, albeit in a quite subtle fashion. The target of this visual confection is _____, so let's keep that Hidden Pivot firmly in mind as a minimum upside target for the Dow. That is notwithstanding the ostensibly bearish planetary alignment mentioned in today's commentary. (Actually, a Bradley date doesn't preclude the possibility of an acceleration to the upside from here.)  The target shown in the chart is so comeplling visually that I would be dumbfounded if it were not reached, and soon.

It's been a few days since we checked in on our favorite bellwether, but Goldman has looked too punk this week to dragoon the broad averages into light-heartedness. The stock may have a chance to show its mettle today, however, since double support lies not far below in the form of a Hidden Pivot at ____ and a moderately important low recorded last Thursday at 139.29.   Alternatively, I still like _____ as a minimum upside target for the near term, but if the stock doesn't get there soon -- say, within the next 3-4 days -- that would be a quite bearish sign. More immediately, a print below the 139.29 low today would turn the hourly chart bearish.

Statistical trivia has been garnering more than its fair share of attention lately, suggesting that stocks may be ready to head lower for a while, if perhaps only out of boredom. Yesterday's selloff, half of which was recouped in the final half-hour by a relatively docile short squeeze, was attributed to energy sector weakness. Specifically, there was word of rising oil inventories - a red herring that we stopped paying attention to long ago.  Weren't these inventories supposedly tightening just a day earlier, when crude futures hit a seven-month high? No matter. Chevron and Exxon Mobil were getting whacked, and that fact alone was enough to sap the inflation mindset so crucial to Wall Street's scenario for economic recovery. From a technical standpoint, recent highs in the broad averages have hit some key thresholds. Our friend Peter Eliades notes that, for one, the weekly bars of the S&P Cash Index are rubbing up against at 189-week cycle, portending a potentially important trend change. And the ever-astute Garrett Jones finds on the same chart a trend line going back to 1990-1994 that was kissed by yesterday's highs. And let's not overlook a Bradley turn date on June 3.  Bradley, to remind you, saw planetary alignments as an excellent timing indicator. Sounds crazy, we know, but the guy was right so often that his methods are more popular now than ever. Out of Their Minds? Technical runes aside, we think any investor who sees value in U.S. stocks right now must be out of his mind. There is so much economic trouble in the pipeline that stocks would be a lousy buy at half their current prices.  We don't begrudge investors a little comic relief now and then, but they had better be storing up a year's worth of belly laughs, since

We dwelled mainly on two trading vehicles: Comex Gold and the E-Mini S&Ps. Our purpose in scrutinizing the latter was to identify trends and trading opportunities within various time frames. Analyzing Gold, we perceived early in the session a growing reluctance of buyers to challenge what was later to become an onslaught of selling. August Gold finished $20 lower on the day, while the E-Mini settled about 10 points lower. We also looked at the Dollar Index and talked about how we could prevent being caught off guard by a bullish trend change beginning from below an already compromised, key support.