December 2009

Two Hidden Pivots beckon above -- 1148.25 and 1162.00 -- but it's futile to try and guess when the implied breakout will come.  It will almost surely happen sometime between now and New Year's Eve,  but  I'd don't see much value in speculating as to exactly when.  If you're patient enough to watch the 15-minute chart all day long, every day, however, I suspect that it will provide decent camouflage to get long with the uptrend.  One such opportunity, with very low risk attached to it, was developing  at the closing bell on Friday.  I've included a chart that shows how it would unfold ideally. _______ UPDATE (10:37 a.m.):  Someone in the chat room asked, What's up with Rick's ES touts? Wasn't I bearish before?  I still am, but not so bearish that I can't see the broad averages making marginal new highs into Christmas.  My 1148 forecast for ES allows for that, but it hardly classifies me as a bull.  I was  slow to come around because I'd failed to think through the logic of my Goldman-as-bellwether idea.  I had doubted stocks could go significantly higher without the fraudulent bank-recovery story to catalyze buying.  I was wrong.  With or without a bank story, the institutional lemmings, with more OPM than they know what to do with, have no choice but to continue to buy up stocks till the year's end. 

GOOG has been struggling for altitude lately, unable to muster the potential last-gasp rally it would take to achieve a Hidden Pivot target at 607.28.  The butterfly spread advised from lower levels is nicely profitable now, but it may have entailed too much work to engage the interest of subscribers.  Here's an easy one, though: If the stock hits 607.00, get short by buying a single January 570 put. It should be selling for less than $5, but it will be easier to be scientific about it by monitoring the option bid/asked spread when the stock gets within a buck or so of the target.

When HUI exceeded a 502.82 Hidden Pivot resistance on December 1, it signaled more upside to at least 532.83, at least in theory. In practice, the bearish impulse leg from the all-time high reached the next day,  516.16, has unfolded with enough strength to suggest that at best, a consolidation of perhaps another 7-10 days will be needed to set the stage for an attempt at new highs. It'll be at least 3-4 days before we see a follow-through leg to the downside on the daily chat but if and when it comes we'll be better able to judge whether the recent damage is likely to prove fatal.  More immediately still, let's set the bar at  471.75 today to tell us whether bulls are feeling feisty enough to turn the lesser charts bullish sooner rather than later.

If Thursday night's turgid price action is any indication, Zany Friday is likely to be a snoozefest. Let's hope some salacious news item concerning the economy perks things up.

The stock would need to pull back to at least 166.18 to be properly rested for another bullish thrust, but we'll accept the actual low at 166.21 as sufficient. That implies a long entry at 167.16 and a 169.99 target, but it's not an ideal camouflage opportunity because of the overnight interval between the creation of 'C' and its calculated entry price 'X'. No trade is advised, but this would have been an enticing one if the expected liftoff had occurred before yesterday's close.

The futures found little support yesterday at the 118^14 Hidden Pivot midpoint of the pattern shown in the chart, so we'll assume they're bound for that number's 'D' sibling, 116^20, at least.  The downtrend begun around Thanksgiving has unfolded with authority, and nothing less than an upthrust exceeding 120^14 will suffice to turn things around.

The futures have been screwing the pooch since early November.  Are they perhaps trying to tell us something?  Such as:  It's not worth trying to guess when the breakout -- or, somewhat less likely, the breakdown -- will occur?  My guess is that it won't be today, so let's  celebrate with a one-day moratorium on Hidden Pivot targets for this sludge-pot.

A Hidden Pivot target at 17.015 went unachieved yesterday when March Silver got hung up in what will likely prove to be a distribution zone.  That number would be a buy with a tight stop-loss; otherwise, a print exceeding 18.050 would be needed to turn the hourly chart unambiguously bullish.

Perhaps if we all stopped watching gold so hard for a day or two it would show less disdain for bulls and do what had come naturally until last week -- i.e., move relentlessly higher. In any event, we needn't debate our choice of benchmarks to tell us when buying has resumed in earnest.  Because the 1154.50 peak shown on the accompanying chart cannot tell a lie,  that's where we'll set a screen alert to wake ourselves.  If the futures instead fall Thursday night after having gone no higher than 1139.00, some key (albeit minor in the bigger picture) supports lie at 1123.30 and 1107.60. _______ UPDATE (3:48 p.m. EST):  Another lousy day for gold. I wouldn't touch the futures before they hit 1090.20, a Hidden Pivot that looks magnetic.  This kind of weakness, with gold getting dragged lower each day, kicking and screaming, will ideally produce a V-shaped low.