July 2009

Is this rally about to deliver on the promise of the strong trend begun in mid-June? If so we should see  the futures settle above _____ by no later than Friday. That's a midpoint resistance whose 'D' sibling lies at _____, and although it has been slightly exceeded intraday (by two ticks), a more conclusive breach is needed to clinch the bullish case for the near term. 

Much of the chop-and-slop of the last two days has taken place above June's highs, so it is logical for us to infer that this is consolidation for another upthrust. We're better off spectating nonetheless, even if the lesser charts are capable of providing a bit of camouflage for the nimble day trader. As of early Wednesday evening, a minor set-up promised to deliver _____, provided this Hidden Pivot's midpoint sibling at _____ is surpassed before _____ is breached to the downside.

Perhaps it is merely boredom that is inspiring new rally targets each day, but the one that caught my eye Wednesday evening is _____.  Its provenance is shown in the accompanying chart, and either it or a lesser Hidden Pivot as _____ looks likely to contain the next thrust. The lower number is now my minimum upside objective for the near term, but either target can be shorted by scalpers with a stop-loss as tight as four ticks (0.40).

With the dog days of summer fast approaching, we wondered whether every small-town newspaper in America is entertaining readers these days with the same sort of lurid stories that fill the Boulder (Colorado) Camera. Boulder is not exactly the kind of place where you'd expect to find luridness in newsworthy quantities. Half the people who live here are trust-fund babies who, one would surmise, spend their days hiking the local trails, writing letters to the editor, or working diligently to protect the rights of prairie dogs. Since these folks mostly lead quiet, unexceptionable lives, it must be the other half of the population that keeps turning up on the police blotter -- or still worse, in the local morgue.  Today's dead-man story concerned a 19-year-old graduate of Fairview High School (my wife's alma mater) who OD'd on something called - if you haven't heard - poppy pod tea.  This ultra-hip beverage contains opium, and although it is sold via mail order and over-the-counter, there is evidently enough opium in poppy pod tea to kill someone who drinks too much of it, especially when it has steeped for a long time.  Death by Tea  This was the second poppy-pod tea fatality in Boulder this year, the first having failed, apparently, to convince at least a few dopers hereabouts that the risk of death outweighs the pleasure of a good high. In both cases, the victims drank the tea, fell asleep, and never woke up. Yesterday's incident was deemed sufficiently newsworthy (i.e., lurid) to go out on the Associated Press A-wire, so you may have read about it in your own local paper.  In other Boulder-area sordidness, a six-car wreck on Highway 36 was reported after a few barrels fell off a truck and the driver tried to retrieve them. What made this

We spent considerable time during this session splitting hairs -- attempting, for one, to make a belated entry in Apple after the stock opened higher on a large gap. Although the "camouflaged" impulse leg we used to get long ultimately did not work and produced a small loss, we were able to discern some possible reasons for this. (Was the impulse leg perhaps too subtle?) The Hidden Pivot Method provides a very powerful tool for understanding the psychology of the markets, and we used it during this session it to tell us why Apple was bound to be a tough trade; and why Gold over the near term was probably going nowhere.

The group in the chat room seems to concentrate on Gold and Oil as the prime vehicles for investment and trading.  Is it time to look at an out-of-favor commodity?  Is it time to plan for some future moves that could be very profitable? Take a look at natural gas.  It is not a buy right now, but it is time to start tracking it and a couple of stocks that could move very nicely in the future.  The stocks are DVN, and CHK,  both natural gas plays if you don't trade the future, or  UNG which is the natural gas ETF. There is a relationship between crude and Natural Gas.  It takes 6 times the natural gas to provide the same energy as a barrel of oil.  August Oil is currently traded at $64.81 a barrel and August Natural Gas, at $3.719.  On an equivalency basis natural gas should be trading at $10.80 or oil should be trading at $22.31. There are many firms as well as trucks and buses that have the choice of using either.  Because of the current price of natural gas, production is being cut.  These are some of the fundamental reasons why either oil comes down in price or NG goes higher.  The stocks usually move before the commodity so keep your eyes open for a trading opportunity.  Just one man's opinion.  Ira UPDATE (per Rick):  At 1:43 p.m., with September NatGas trading around 4.034, we can project a short-term top at 4.183. (10-minute chart, where A=3.408, from July 16). That number should be used as a minimum upside projection for now. 

Yesterday's push by the broad averages above June's peaks felt like a shot across the bow.  But was it perhaps so obvious and intimidating that we should play the contrarian?  In practice we can have it both ways by simply watching the impulse legs develop on the lesser charts. This should provide fodder for this morning's weekly tutorial session.  Please note that a new password is in effect for this session, so if you haven't registered yet, you should contact mikej165@gmail.com to be assured of gaining entry.

In after-hours trading Tuesday, AAPL had somewhat exceeded the 157.53 Hidden Pivot that we were using as a minimum upside target. The indicated high as of around 9 p.m. EDT was 158.40, which if correct would imply the rally is likely to continue to a target of higher degree. The logical number thereof would be _____, so we'll use it as our new objective. It implies an amazingly steep ascent and an ABC pattern with a trajectory that I cannot recall seeing before. 

The futures traded up to 89.23 on the opening bar yesterday, stopping out a Pick of the Day short at 89.21 for a tiny loss.  (If you were slow to react, or if you used a slightly wider stop, you could conceivably have come away with a profit, since the futures never traded above 89.27 and spent nearly the entire day below that number. The intraday low was 88.10.)  The fact that the upside target was exceeded, albeit only slightly, suggests still higher prices are coming. If so, look for a pop today to _____, a Hidden Pivot that you can try shorting with a stop-loss at _____.  You'll be on your own if the order fills, but don't hesitate to nail down a partial profit on a pullback of as little as 15 cents.