June 2012

There's no gainsaying the bearish power of yesterday's impulsive thrust, which breached no fewer than three 'external' lows and one 'internal' without pausing for breath. A rally from the 1317.50 low could loop over in b-c fashion and provide us with a tradable 'p' support, but as of Thursday night no compelling pattern had developed that could conceivably benefit night owls.

I've asked chat-roomers to be on the lookout for opportunities to get short in the broad averages. Today's touts contain an extra incentive to do so in the QQQs, where the first qualifying entry signal will be worth a free year's subscription and a few other frills worth more than $1400.  (Click here for a week' free access to all services and features of Rick's Picks, including access to the chat room and intraday alerts.)

We can short this vehicle whether it's headed up or down, but the risk of whipsaw will be lower doing the former. To incentivize the task, I'm going to offer a free year's subscription, including access to weekly tutorial sessions, to the first Pivoteer who signals a trade that survives for at least 24 hours. You will also receive a second annual subscription to be awarded to the recipient of your choice; and a one-hour private tutorial session worth $350.  To claim your prize, the trade must be initiated using a Hidden Pivot signal, and the signal must be disseminated in the chat room in timely fashion so that at least two others have been able to get aboard. For inspiration, notice in the 5-minute chart reproduced alongside that nearly every conventional 'X' entry signaled yesterday would have produced a success.

Silver is closer than Gold to breaching several key lows that go back to January 2011.  The breach seems inevitable at this point, and if it occurs we should expect a running of stops that would result in more than a merely marginal penetration of the lowest of them, 26.200, recorded in September of 2011.  Thereafter, a powerful rally could ensue, since Silver futures would have been unburdened by then of many despairing, would-be profit-takers.  Prospectively, and from whatever low is forthcoming, an unpaused rally would need to hit 31.475 to create the kind of bullish impulse leg on the daily chart that could get legs. _______ UPDATE (June 25, 3:05 a.m. EDT):  It'll take a very modest rally to 27.010 to generate some bullish heat on the lesser charts.  That's a tick above a look-to-the-left 'external' peak from last Thursday, and a move that gets there and then pulls back in b-c fashion could set up a low-risk entry opportunity for camouflageurs.

From a coolly technical perspective, the daily chart looks no worse than 1497.40 from here -- just $67 beneath yesterday's low. That is probably the best-case scenario at the moment, but whether things go literally downhill thereafter will depend on the ability of 1497.40 to turn back the stampede. For if it does not, it is but a mere $5.90 to the watershed low at 1491.60 recorded almost exactly a year ago, on July 1.  That low may look like a will-o'-the-wisp, but because it was the last stick-down bar before Gold embarked on a historical bull leg, it counts for more than might appear. We'll deal with the precise implications if 1491.60 s breached if and when it happens, but suffice it to say, the creation of the first bearish impulse leg of monthly degree since October of 2008 would not be a welcome sign. There are nevertheless some things to watch for if you've got your fingers crossed: 1) a bounce from either of two Hidden Pivot supports at, respectively, 1429.60 and 1392.40; (Please note, however, that both of these numbers are not to be relied on, since the impulse legs associated with each are not true impulse legs for reasons of having failed to surpass the requisite pair of prior lows; and 2) a humongous rally following the running of stops on a breach of 1491.60.  This last signpost cuts both ways, however, since a relatively feeble rally following a breach of 1491.60 would be telling us to "Look out below!!"

The Dow got sacked for 250 points yesterday, but consider the chart below if you think it’s too late to jump on the bearish bandwagon.  Of course it isn’t. On the daily chart, the bar graphically representing Thursday’s selloff barely stands out. It’s not even as bad as the 275-pointer that occurred on June 1. A thousand-point rally followed, turning the downdraft retroactively into a bullish swoon.  So don’t despair about missing a great opportunity. This bear market is just getting rolling, and it is all but certain that there will be plenty of chances to get short down the road with stocks rising. Not that it will be easy, since every Tom, Dick and Harry will be trying desperately to get on the right side of the move. More on that in a moment.  Concerning yesterday’s mini-avalanche, we were a day late ourselves, having challenged subscribers the night before to help us pick the top.  We figured it would be as easy as shooting fish in a barrel, since nearly 800 traders, many of  them regulars in the Rick’s Picks chart room, have taken the Hidden Pivot Webinar.  (Click here to find out about the next class -- and get a $50 discount.) Keep this well-trained army of chartists in mind as you read the following excerpt from a DJIA trading “tout” that went out to them Wednesday night: My goal is to short a top that will be distinctively recognizable as such after-the-fact.  The risk, of course, is that I will miss this top while greedily attempting to milk the rally for that last oh-so-satisfying inch. In attempting to [short the top], I’d welcome some help from chat-roomers, since the next thousand-point move in the Dow has home-run potential in comparison to whatever base-hits you may be pondering

Just a scoach more and the futures will have achieved an unimportant downside target at 27.330 that has been nearly two weeks in coming. That would leave them just above a key external low at 27.170 recorded on June 1 that must not give way if bulls are going to stand a chance of making June a comeback month in the seven trading days that remain. Alternatively, they would need to muster a thrust to at least 29.015 straightaway to generate a pulse on the hourly chart.

Yesterday's histrionics created a bearish impulse leg on the hourly chart that was unnegated by the end-of-day rally. Nevertheless, the point 'C' low associated with an aging bullish target at 1653.30 remains intact, giving us a reason in theory to think the futures capable of rallying to that target within the next several days. And it had better happen that soon, since the bull cycle is getting heavier with each passing day.  Even more immediately -- and perhaps more realistically -- the downtrend in motion late Wednesday night promised to deliver 1578.70 now that its p sibling at 1600.60 has been exceeded by a decisive $2.50. _______ UPDATE (10:15 a.m. EDT):  The futures have plummeted $37 today, making a so-far low at 1578.60 -- a dime from my target.   The bounce thereupon has carried thus far to 1587.20. _______ UPDATE (1:38 p.m. EDT): Following an $11 bounce from the target, GCQ dove anew toward a 1566.40 target (60m, A=1602.00 at 8 a.m., B=1578.60, C=1589.80) that has also been exceeded, albeit by less than $2 so far.  This is bearish nonetheless, but we can expect the carnage to halt -- temporarily -- just above the marquee low at 1556.40 recored on June 7.

Noting the deranged spasms that numerous trading vehicles traced out yesterday, I checked the news to learn the ostensible cause -- in this case, the non-news that the Fed would continue Operation Twist through 2012. Gee, wow, yippee.  Once the knee-jerk histrionics have subsided we should expect the Dow to continue just a bit higher in preparation for its long-awaited swan dive. My goal is to short a top that will be distinctively recognizable as such after-the-fact.  The risk, of course, is that I will miss this top while greedily attempting to milk the rally for that last oh-so-satisfying inch. In attempting to catch that always-elusive moment, I'd welcome some help from chat-roomers, since the next thousand-point move in the Dow has home-run potential in comparison to whatever base-hits you may be pondering at the moment. To guide you in this class project, I'll note that my own forecast calls for a tradable peak at 12931, or perhaps 12973 if any higher. The provenance of each of these 'D' Hidden Pivots is shown in the accompanying chart.  As a matter or practice, however, we should already be looking for the downturn on charts of lesser degree -- but no later, in any case, than on a print below 12696, where the hourly chart would 'go impulsive' today. Please note as well that any shorts from above 12931 would be going up against a fresh bullish impulse leg on the intraday charts, implying that camouflage will be required to get this trade done.  Want to join in our group effort to nail the top?  Click here for a free trial subscription to Rick's Picks, including access to the chat room 24/7.