December 2011

With the decisive breach of the 1593.30 midpoint support shown in the chart, the futures appear to be headed down to at least 1571.00, its 'D' sibling.  Please note, however, that an uptrending reversal without having reached that number would be warning shorts to step aside. The bullish scenario would be actualized by a push past the midpoint resistance of a larger, bullish pattern begun on December 15 from 1566.20. ______ UPDATE (10:42 a.m. EST):  Gold is getting hit today and was down $25 at its so far low -- 50 cents from my target -- at 1570.50.  If you camo'd your way aboard near the bottom, keep in mind that a decisive breach of the so-far low would portend more slippage to as low as 1445.70 (!), a very important Hidden Pivot that comes from the daily chart (A=1760.50, B=1562.50 and C=1643.70.)

The futures receded timidly yesterday after bullying a minor midpoint resistance at 1163.25. The overshoot was just three ticks, but if buyers had kept going they might have rampaged all the way up to...1167.00!  That's a Hidden Pivot target of minor consequences, but as we pointed out in an intraday update, it's within spitting distance of the 1169.25 print that would turn the daily chart unambiguously, impulsively bullish.  We advised camouflageurs to take a few small shots at these levels, since, even though there's no strong evidence the futures are about to pop, we'll be getting great odds. Keep in mind that if stocks do get short-squeezed, the drama is all but certain to occur overnight, shutting out most of the trading world. Accordingly, night owls should be prepared for a bullish reversal from 1255.25, a 'D' correction target shown in the chart. The downtrend has stalled precisely at the 1258.00 midpoint, so there's a possibility the turn will come from these levels. _______ UPDATE (10:36 a.m. EST):  The correction has overshot 1255.25, creating a new (and potentially tradable) downside target at 1246.25. Camouflageurs might look to get short if the upward correction of the moment hits 1250.75, a p midpoint associated with 1246.25. (Note:  Within 45 minutes of the above update, during the weekly tutorial session, we got short via camouflage. You can see how by reviewing the recording of the session. It is accessible online to all who have taken the Hidden Pivot Webinar and who are registered.  Hitting these highs and lows within a tick or two is a simple parlor trick that you too can learn in a month. Click here if you think you’re ready to try.

If there's no one around to hear bad news, is it bad news?  Apparently not.  Amidst some less-than-believable sightings of green shoots come reports of a drop in home prices at a time when mortgage rates are at record lows.  Somewhat more credible, although perhaps only slightly so, is an Iranian threat to block the Strait of Hormuz, through which a fifth of the world's oil supply passes.  The Iranian president says the threat is in reaction to a piece of U.S. legislation that, once signed by Obama, would reduce Iran's oil revenues. The intent is to deter Iran from making a nuclear bomb, but who actually believes the mullahs will be so easily deterred? In any event, NYMEX crude rallied $2 intraday but has risen only a further six cents Tuesday evening.  Through it all, Rick's Picks has experienced a drop-off in holiday-week traffic that suggests its subscribers will not be the ones moving markets in the remaining days of 2011 no matter what the news. Still to come, on Thursday, is what will have to pass for economic news this week: initial claims for jobless benefits, the index of November pending home sales, and December's Chicago purchasing managers index. Will we be able to stand the suspense?

Today's airless dirge has gotten the futures within a single tick of a minor, 1263.25 midpoint resistance tied to a seemingly equally boring 'D' target at 1267.00 (1-minute chart, A=1256.25 at 9:37, B=1264.00, and C=1259.25 at 10:55 a.m.). These numbers may sound insignificant for trading purposes. However, the reason such in-between-the-holidays slop could be worth the dilgent camouflageur's attention is that a print exceeding 1269.25 would surpass two major peaks on the daily chart -- one internal, one external.  This could conceivably set in motion a chain-reaction with the potential to terrorize shorts for the remainder of 2011.  It could also provide a rampaging start to 2012.

To prepare for the New Year, we looked at the charts for the S&P index, gold, silver, T-Bond futures, the euro and the dollar Friday morning. Some of the conclusions will surprise you, and that’s why we are making this recording available to all. The session concludes with a Q&A period during which questions from some of the 150 who attended were answered. The entire recording runs two hours, but stay as long as you like, or fast-forward to the juicy parts.

Don't let today's suffocatingly boring price action distract you from the fact that the E-Mini S&Ps are just inches from creating a powerful, bullish impulse leg on the daily chart.  That is indeed the case, and it would therefore behoove shorts in particular to pay close attention to such little details as I've noted in the just-published tout.

Comex futures have begun trading Monday night but are barely registering a pulse.  February Gold is down 0.40 at the moment, trading 1.70 off the so-far low, and although there are possible camouflage opportunities to be detected on the one-minute chart, it will probably be more trouble than it's worth trying to initiate trades overnight.  Even so, I've included a chart that shows numerous external peaks that could useful for this purpose. ________ UPDATE (7:44 p.m.):  My advice is to stay clear. The predators who work the night shift are very much in charge right now, having engineered an air pocket moments ago that hit a 1600.20 downside Hidden Pivot target to-the-exact-tick. Even if we had been bidding at that price, there would have been no fill, since only a handful of contracts traded at the low.

Like everyone else, I expect stocks to waft higher this week on extremely light volume.  We shall see.  In any event, there will be at least one impromptu trading session in addition to the regularly scheduled Wednesday morning tutorial session. If you don't subscribe but would like to be notified and to receive an access code to this online demo, click here for a risk-free seven-day trial to Rick's Picks.

Regular coverage of popular trading vehicles, including index futures, commodities, gold & silver futures and widely watched stocks, will resume late Monday evening. Markets are scheduled to begin trading then in limited fashion, much as they do on Sunday nights.