January 2012

As we went to press shortly after midnight, March Silver was tracing out a bullish pattern that could spell opportunity for camouflage-savvy night owls. For your gudiance, I've sketched out a hypothetical entry opportunity on the hourly chart accompanying today's tout.  _______ UPDATE (3:18 a.m. EST):  The trade triggered, but you should check my tout, since it goes into detail in describing what happened next.

Unlike February Gold, this vehicle is within easy distance of negating a target 40 cents below the recent bottom at 26.145. However, a much lower target at 18.355 is still in play, and we also need to take into account that the rally so far is not especially impressive considering that it was catalyzed by a viciously false breakdown beneath September's neon low, 26.185.  On balance, we can trade the minor rallies but use tight stops.  Just such an opportunity could unfold Tuesday night or Wednesday based on the pattern shown. The implied entry risk would be $1500 per contract on the 120-min chart (25% of A-B x $50/1 cent), so you'll need to zoom down to a chart (end entry pattern) of lesser degree when the big-pattern 'X' is about to trigger. _______ UPDATE (3:11 a.m. EST): A pattern very similar to the one I sketched triggered a 29.410 'X' entry signal at around 2:10 a.m., but executing the trade on the 1-minute chart would have produced an unacceptably large loss of 2.5 cents per contract, or $125. Entry would have come off the pattern A=29.400 (2:47 a.m.); B=29.465 (2:48 a.m.), C=29.435 and X=29.455.  A lower, second point 'C' at 29.420 (2:53 a.m.) yielded a solid winner that would still be live, but strictly speaking, 'camo' trades should work on the first try or we don't do them.  The next valid entry opportunity -- and winning trade -- would have come at X=29.495 (3:00 a.m.), but I'll let you discover the details so that you can learn from them. Swimming with the sharks in the wee hours needn't be scary.  If you're a night owl looking to make the most of the excellent opportunities that frequently occur when most traders are asleep, click here.

From a Hidden Pivot perspective the rally so far is unimpressive on the daily chart, and even on the 'hourly,' bulls seem to be struggling to create the kind of gung-go impulse legs that would signal the start of a major move.  Moreover, the 1445.70 downside target we've focused on will remain valid until such time as the 1643.70 point 'C' of the bearish pattern with which it is associated has been exceeded.  That's the bad news. However, as a practical matter, the rally has distorted the symmetry of the downtrending ABC (where A=1760.50) sufficiently to suggest that the pattern will not play out to its 1445.70 target. So how will we know whether the so-far moderate buying spree is capable of getting legs?  Let's stipulate that it impulse above the 1645.80 'external' peak on shown in the chart -- or better yet, above the more imposing one at 1665.20 recorded a day earlier.  In the meantime, camo traders have quite a few small peaks on the hourly chart created since 12/21 to 'discover' impulsive A-B rallies. Please keep in mind, though, that any entry signal thereof would need to be interpolated on a chart of lesser degree so that the initial theoretical risk would not exceed $60 per contract. In practice, this means the distance between C and X of the pattern used to make entry be no more than 50 cents.

Yesterday's gap through at least two Hidden Pivot midpoints suggests bulls will have little trouble pushing this vehicle past the 1283.00 peak recorded in late October. The move targets a minimum 1293.75, a Hidden Pivot that will not be particularly useful for trading because of its close proximity to the round number.  Supply will thicken between 1300 and 1350, but opportunities to get aboard using camouflage appear limited on the daily chart, since the closest external peak above 1300 lies at 1331.50.  You should stay tuned nonetheless, since we may be able to catch a ride for at least a part of the expected 80-point thrust using benchmarks from the lesser charts.

It’s days like yesterday that seem to suggest the central banks could keep stocks afloat more or less indefinitely. How can shares possibly go down as long as there’s a sea of digital dollars to support institutional players with no better use for interest-free money? Actually, it took relatively few dollars to push the Dow Industrials up 260 points at the apex of yesterday’s short-squeeze.  That’s because the rally was all but over minutes after it began. Stocks opened on a gap well above Friday’s close, with almost no shares changing hands in-between.  Indeed, it wasn’t a buying stampede that added tens of billions of dollars to the value of publically traded stocks; rather, it was the premium sellers tacked on when pent-up demand, mostly from bears, exploded after a three-day holiday. With shorts caught in the ringer, why would sellers want to get in the way of the resulting melt-up? So they stepped aside. And anyone who was not long stocks when the market closed on Friday was locked out.  In retrospect, we can’t understand why we weren’t in more of a betting mood ourselves when trading wound down last Friday, the final session of the year. Betting the pass line would seem to have been a no-brainer for anyone who “knew” that nothing horrific would happen over the weekend.  As it happened, the headlines concerned arson in L.A. and the Iowa caucus. No scary new bailout plans from Europe. No tankers sunk in the Strait of Hormuz. Just routine stuff. Although popular wisdom has always said the stock market hates uncertainty, these days it would appear that nothing thrills Wall Street quite like a dull-news weekend. *** (If you’d like to have these commentaries delivered free each day to your e-mail box, click here.)

Here's the latest Auerbach & Grayson report from our globetrotting friend Jonathan Auerbach, who searches the world for ground-floor investment opportunities that his colleagues have largely shunned or overlooked: As of January 1, Nigeria has abolished their long-standing fuel subsidies with the result that gas at the pump immediately costs N138-43/liter (~$3.32/gal) from N65/liter (~$1.54/gal). While your evening news may show massive protests along with other local hysteria, take a walk here with us to assess the bottom-line of this critical free-market transformation which will be highly beneficial economically to sub-Sahara's largest economy to be. Just let this sink in...the value of the fuel subsidy was equal to 25% of the annual Nigerian Federal Budget! Its removal now provides significant private-sector incentives to develop up and down stream projects in the energy sector. It clearly will provide reallocation of government revenues to massive infrastructure and residential shortages. Our local partner CSL (soon to release a comprehensive impact piece on this event) see the event as currently FX neutral but later strengthening based on experiences from similar events in other emerging markets (Indonesia and Iran) where the balance of payments was positively impacted by the removal of incentives to import dodgy products in order to collect subsidies. Bottom line: This is going to have magnificent impact on a country where government is truly making great strides on empowering the private sector. You had better have Nigeria on your radar screen and do not lose sight of their impact on the rest of the continent. Yes, that includes Egypt.

Rick’s Picks is pleased to announce the winners of scholarships to the January 11-12 Hidden Pivot Course and 90-day trading boot-camp. From among more than a hundred applicants, we chose three recipients. One is an ex-veteran looking for a way to maintain adequate retirement resources.  Another is a single mom seeking to boost her child’s college education fund. And the third is a firefighter/paramedic intent on making better use of his flexible work schedule. Each will receive the six-hour course, related materials, access to online “chalk talks” held every Wednesday morning during market hours, and an opportunity to meet one-on-one with Rick on a regular basis for remedial work. Because we want all students to benefit from this intensive process, everyone who has taken the course will be able follow along step-by-step, lesson-by-lesson, either by monitoring the private sessions when they are held or by reviewing recordings of them that will be accessible 24/7 via Rick’s Picks’ educational library. We purposely selected three students with very different reasons for wanting to take the course so that their strengths and weaknesses, their motivations and varying levels of skill would resonate with each of you in some useful way.  The scholarship winners will be offered intensive and personalized training, since Rick’s goal is to turn each into a successful trader as quickly as possible.  As noted above, everyone who has graduated from the Hidden Pivot course will have the opportunity to follow the learning process from day one. You need only register for the Wednesday morning trading sessions to gain access to the personalized classes planned for the scholarship winners. (If you have questions concerning how to do this, click here.) All Students Invited Registrants should watch their e-mail for updates and links to all special sessions besides the ones given on

By popping through a 144^21 midpoint resistance Friday, the futures showed themselves capable of continuing to its 'D' sibling, 147^14, at least. Camouflageurs looking for a bullish handhold will need to zoom down to the 15-minute chart, since there are no 'external' peaks to be found on the hourly below 145^23.  On the '15', the first you'll find -- a very subtle look-to-the-lefter -- lies at 145^13 (on 12/20 at 9:30 a.m.)

We'll put aside a major downside target at 19.46 for now, since this vehicle went bullishly impulsive on the lesser charts Friday. The move projects to at least 25.66 over the near term, subject to midpoint resistance at 25.05, and a breach of the latter number by more than four ticks would make the former an odds-on bet.  Camouflageurs should try to get long if a b-c pullback occurs from somewhere in the range 25.06-25.10. ______ UPDATE (10:33 a.m. EST): As is almost invariably the case, a gap through the 'x entry point signaled further upside at least to the 'D' target.  In the actual event, it has been exceeded so far by 20 cents with a high at 25.86 that appears destined to give way. Until the rally gets above pre-Xmas highs at 26.88, however, it is just noise.