January 2012

Yesterday's vicious chop was appropriate considering the obviousness of Friday's bullish enticement. There are no rally targets worth talking about at the moment, but any effort to get long at these levels is justified by the robustness of the impulsive thrust. Assuming you use camouflage, it will be easier to accomplish on a pullback that leaves a pitted trail of 'external' peaks similar to the one that has occurred earlier tonight (red arrow).  The 'external' peak  at 32.535 could conceivably work, but it looks like too big a leap to go unnoticed by other traders.

Now that a well-advertised Hidden Pivot target at 1681.50 has been achieved we should look for the futures to take a breather for at least a day or two. Any less would indicate that bulls are still chomping at the bit even after having run hard since December 29. Once above 1681.50, the next likely stop would be 1690.50, a minor Hidden Pivot given here earlier. Camouflageurs looking to get onboard will have two external peaks to leverage here, and the ideal opportunity would come on a shallow pullback from between them (see inset).

Stay tuned if you're as keen to short this brick as I am.  We are taking a patient approach -- and a good thing, too, since the merciless squeeze that Goldman's deft handlers have applied to the scrota of bears is starting to produce some real pain.  Indeed, yesterday's opening-bar spike refreshed the bullish impulsiveness of the 120-minute chart. It also furthered the prospect of our getting long while we wait for the stock to make a targeted top suitable for shorting aggressively.  Want to join us for the ride?  Click here for a free trial subscription to Rick’s Picks.

A 1316.75 rally target we'd  been using since, practically, the Mesozoic era got hit yesterday as the futures worked their way up to a slightly higher top at 1318.25. The subsequent selloff was shortable though not easily, even using camouflage. If you tried it, the first place you could have initiated a trade that met all of our requirements was at 1308.25 at around 12:03 p.m. (3-minute chart, a=1313.25, b=1308.00 and c=1309.75.) The joyride would have been short-lived but profitable. Now, night owls can look forward to moderate downside predicated on a 1301.00 Hidden Pivot target (see inset) that a recent webinar grad mentioned in the chat room. That's not enough to shoot for, and, come to think of it, you might even get better odds trying to get long on the '3' with a micro stop-loss. (Just don't expect it to take you very far.)

Talk of economic recovery is surfacing even in the Rick’s Picks forum, and so it’s probably a good time to consider why the very notion of a sustained recovery is factually unsupportable. It’s not hard to fathom why sightings of supposed economic green shoots have returned like kudzu in recent weeks.  For one, Europe’s slow-motion collapse has been put on hold by an all-out effort by the central banks to suppress sovereign borrowing rates. This is being accomplished through “swaps” that allow the European Central Bank to exchange unlimited quantities of euros for Fed dollars for a nominal charge of 50 basis points.  In effect, U.S.- style monetization is being surreptitiously applied to paper over Europe’s debt problem. For two, with the Fed artificially holding mortgage rates near all-time lows, home sales – although, significantly, not home prices – are staging a dead-cat bounce.  And for three, the endless election campaign has provided comic distraction for a nation terminally fatigued by real news. The news media are undoubtedly relieved to be able to report the meaningless details of an endless campaign because it frees reporters and editors from having to tackle more challenging subjects. (Full disclosure: Your editor was a newspaper editor and reporter for seven years.) Contrary to the brazen, hopey-changey lies being served up by the bankers, politicians and a news media too lazy, ignorant and conventional in its thinking to report that the emperor is wearing no clothes, here are some reasons why the U.S. economy is not only not recovering, but why it cannot  recover without a wrenching shakeout at least equal in severity to the Great Depression: Europe cannot possibly grow its way out of the hole. Only bankruptcy or hyperinflation can extinguish debts that have grown beyond servicing, let alone repayment. The same goes

Click here for a link to a lengthy technical report sent out over the weekend.  It comes courtesy of our friend Jonathan Auerbach.

There's an interesting divergence between Gold and index futures Sunday night, although the differential is not yet sufficient for us to infer that business-as-usual won't have them re-synched by sunrise. The E-Mini S&P opened on a smallish gap down, but there has been little movement since.

Silver's curiously steep trajectory on Friday pushed it past a few minor Hidden Pivots, but even if the forces driving the move were anomalous  -- a short-covering liquidation, for example -- they seemed powerful enough to get the March contract to December 2's key high at 33.740.  The bad guys would have no place to hide if that number is surpassed, but even before they panic, camouflageurs should prepare to leverage a B-C pullback from above the secondary peak at 33.300 shown in the chart. Any entry opportunities thereof would come, not from subtleties that only we understand, but from trading reflexes quick enough to catch a fleeting buy-stop at X.  Want to learn how to forecast and trade like a pro?  Click here for a free trial subscription to Rick’s Picks.

A 1681.50 target may be growing stale, but that does not invalidate it.  Late Sunday night, DaBoyz were attempting to develop thrust sufficient to push the February contract above Thursday's 1670.60 high. Camouflage entry opportunities were exhausted earlier this evening, however, when the futures pulled back after breaching an external peak at 1668.80 also recorded on Thursday. Bulls take note: a breakout above 1670.60 could be a trap, since there's an additional Hidden Pivot resistance at 1673.70 (see inset) with potential stopping power. _______ UPDATE (3:36 p.m. EST): The longstanding target at 1681.50 nailed the apex of today's $18 rally within three ticks.  Because it was so long in coming, we should treat the high as a potentially important one.  However, if bulls should blow past it today or tomorrow, the next logical stop would be 1690.50, a Hidden Pivot.