August 2010

It's 12:30 p.m. EDT, and night owls may wish to consider a delicate short from 1090.00 in the E-Mini S&Ps. It's worth no more than a three-tick stop-loss, but a side benefit is that it could help while away those lonely hours.

The futures are being pushed by two strong uptrends that project to 191.05; or if any higher, to 197.00. The respective midpoints of these Hidden Pivots lie at 178.58 and 176.80, so it is in the range between them (see chart)  that you should look to bottom-fish via "camouflage".  In practice, this will likely entail jumping on the first northbound abc pattern that turns up on the 3- or 5-minute bar chart.  The lines define a logical range for a swing low to occur. ______ UPDATE (August 19, 9:33 p.m. EDT):  The futures triggered a camouflage entry at 176.33, followed by a profitable exit on half the position at 177.36, the Hidden Pivot midpoint of the pattern shown. For tracking purposes, I'll assume we are long one contract whose cost basis has been reduced by the amount of our paper gain to 175.03. Use a break-even fixed stop for now, but we'll give it plenty of room to run before we switch to a 0.30-point trailing stop at 190.65.

Even under the magnifying glass of yesterday's tutorial session there was precious little to do or to discover. Bullish and bearish influences on the daily chart are roughly equal, making it relatively easy for DaBoyz to wait for opportunities to either shake the futures down or squeeze them higher.   This could spell opportunity only for traders patient enough to wait for the subtlest possible impulse legs to develop on the one- and three-minute charts. _______ UPDATE (2:06 p.m. EDT):  The futures have gotten hit hard today, so we need a new downside target.  Using A=1124.50 from August 10, a fairly compelling pattern gives a downside target at 1040.25. This is corroborated by the fact that the downside stall has so far been at 1068.50, three ticks from the calculated midpoint 1069.25. What this implies is that a more decisive breach of the support -- say, 1067.00 -- is likely to send the futures plummeting to 1040.25, give or take just a few ticks.

There's no change in my immediate outlook:  September Silver must close above 18.485, a  Hidden Pivot midpoint, before we infer that it's a good bet to reach the 'D' sibling of that resistance, 19.170.

We are using  two aging rally targets at, respectively, 1236.70; or if any higher, 1244.20.  The uptrend has been slow but steady, hinting that it is unlikely to blow away either of the targets. Scale-out profit-taking is advised for swing traders still long.  If you're interested in seeing how a low-risk long could have been initiated near yesterday's lows without sticking one's neck out too far, check out the recording of the weekly tutorial session, which webmaster Mike Johnston has made accessible to all.

Long-term yields could be bottoming here if a T-Bond futures target that we’d flagged the other day holds up.  The target, a Hidden Pivot resistance at exactly 134^09 (basis the September contract), lies just two ticks above yesterday’s high, 134^07, and corresponds to a yield of about 3.64% on the 30-Year Bond. However, since we cannot rule out the possibility that bond prices will continue to rise, driving yields even lower, we will continue to monitor the target closely. There are several possibilities going forward. One is that the target gets decisively penetrated within the next few days. If that were to occur we would regard it as a clear sign that the extremely powerful rally begun in April is likely to continue at its recent pace. T-Bond quotes have been rising steeply since spring as yields have fallen from around 4.86%, but it’s conceivable that yields could drop to as low as 3% if the rally continues until November.  Another possibility is that the 134^09 Hidden Pivot contains the rally for the time being. That would suggest that yields will either remain steady or move higher. Usually we can discern a reason for trend changes in the trading vehicles we track and forecast. But in the case of the long bond, the logic of a downturn in prices can be very elusive, if not to say arcane. Explaining why bond prices have risen in recent months, on the other hand, is not rocket science. The conventional explanation is that investors around the world have bought U.S bonds because they are still the safest investment around. If there is any borrower that can still be reckoned as too big to fail, the U.S. Government is it. (For the record, we see the U.S. as a bankruptcy-in-progress and cannot conceive of any

Because there was a large audience on board for this morning’s session, we looked especially hard for real-time trading opportunities. Although there were no magical trades to be found in the E-Mini S&Ps, the December Gold contract turned out to be….well, a gold mine. We were able to identify one entry spot in particular that followed an important rule of camouflage trading: Trust the Force – meaning, don’t hesitate to jump on the very first northbound ABC that has followed a possible swing low. Incidentally, one person in the room said he profited on a mildly promising trade in the E-Mini that we’d identified in real time. You’ll see it in this video -- and hear our reason (though not his) for getting cold feet.

I described yesterday's toying with Wal-Mart earnings as a game of "chicken," but DaBoyz gave away their hand in the closing hour when they dove out of stocks. This should tend to make it harder to lift shares on merely so-so news, but if it's not forthcoming don't be afraid to sell into whatever minor rally is promoted.

I mentioned here earlier that Apple's churn since last spring is an oddity, considering the company's world-beating performance as an innovator and marketer of consumer electronics. Let's actualize this observation with a modest speculation, offering 200 shares short at 259.04 (a Hidden Pivot midpoint off the hourly chart, where A=240.01 on 7/20), stop 259.21, good through Friday. ____ UPDATE: Cancel the trade, since AAPL has gone too flaccid and boring to care about at the moment.