July 2012

Gun rights advocates have been understandably quiet as the nation obsesses over the horror of Friday night’s movie theatre massacre in Aurora, Colorado. Yet another whack-o from out of the blue, this one clad in SWAT team gear and armed with a Glock pistol, a shotgun and a semi-automatic rifle, has indiscriminately killed or injured scores of innocent people. With 12 dead and another 58 hurt, the episode is destined for historical notoriety, even if the gruesome details are forgotten in a year or two. When was the last time something like this happened?  How many were killed? We’ve begun to lose track because so many of these horrific incidents have occurred in recent years. Meanwhile, those who would reflect nostalgically on earlier times as having been less troubled will have forgotten Charlie Starkweather. Imagine the damage he could have done if he’d been armed with an assault rifle instead of a revolver. As it happens, James Holmes, 24, the man charged with the Dark Knight Massacre, didn’t have an automatic weapon, but rather a 'semi' with a 100-round magazine that reportedly jammed early in the assault. He also had no police record, only a speeding violation. This means he could probably have bought a gun even in states where weapons permits are tightly controlled. None of this will matter to political liberals in the weeks and months ahead as they use Holmes’ rampage to press their case for a total ban on, for starters, handguns. Their chances of prevailing, fortunately, are nil.  It’s not going to happen. Although a total ban would undoubtedly make it harder for Holmes and other crazies to acquire murderous firepower, it would never to stop them. Nor will any liberal remedies mitigate the culture of violence that increasingly coaxes psychopaths like Holmes to act

The futures have been building an ostensibly bullish wedge since early June (see chart), but the process has dragged on for so long that traders can be forgiven for having ceased to care. Just so that we don't miss the opportunity if it ever arrives, I'll suggest setting a screen alert at 1592.30 today.  That would be my hair-trigger threshold on the hourly chart for the start of a potentially significant bull move.  Learn how to use ‘camouflaged’ entry signals to dramatically reduce risk. Click here to find out about the upcoming Hidden Pivot Webinar and get a $50 discount coupon on the home page.

I'd challenged readers to "short the top' in this vehicle, and it appears that the chat room's 'Crusty Buttocks' may have come up with a winning trade.  Mr. Buttocks' clearly signaled entry was announced in the chat room last Thursday, a nickel beneath what is looking so far like a short-term top at 65.31.  For tracking guidance, I'll assume an initial position of 400 shares (or a multiple thereof) from 65.26, his price.  For further pointers on managing the risks of this trade, tune to 'c buttocks' in the chat room.  Good luck, Crusty!

Although the recent top in the Dow Industrials fell a whisker shy of my 13003 target, the Diamonds hit a corresponding target I'd given at 129.51, eventually registering an intraday high of 129.71.  Since I had advised buying four September 126 puts if DIA got within 0.15 points of 129.51, I am establishing a tracking position --  four puts @ 2.12 (their low that day was 2.04). For now, offer two of them (or half of the original position) to close for 2.80.  My immediate downside target for the QQQs is 127.36, based on the pattern shown. It is that target on which I have based the profit-taking strategy above. _______ UPDATE (10:07 a.m. EDT): With this morning's powerful gap-down opening, we did far better than we'd planned, exiting two puts (or half of the original position) for 3.75, the price they fetched on the opening rotation.  Imputing the paper profits thereof to the remainder of our position gives us an effective costs basis of 0.45 apiece. Do nothing further for now.  The purpose of relatively easy trades like this one is to pay for the cost of your subscription, and we are well on our way to that goal with this trade. ______UPDATE (July 24, 12:45 p.m. EDT): The daily chart is still bullish, believe it or not, but this would be negated with a print at 124.24 that would take out two prior lows.  The bigger picture, starting with the 133.14 high recorded on May 1, projects to at least 123.23, the 'p' midpoint of the pattern. It's tied to a D target at 116.67, which is my worst-case projection for the next 4-6 weeks.  We'll look to spread off our puts by shorting some juicy out-of-the-moneys against them if and when p is approached, but for now

The Pivoteer who uses the chat room handle 'Crusty Buttocks' has signaled a potentially winning trade in the QQQs that was still 'live' as we went to press Sunday night.  I'd challenged readers exactly two months ago to short the top of the Mother of All Bear Rallies. The prize for succeeding, worth nearly $1,500, included a free year's subscription to Rick's Picks, an additional subscription for a friend, a one-hour private tutorial session, and a year's access to the Wednesday tutorial sessions. I had originally stipulated that at least two other chat-roomers confirm having done the trade, but because the room has been deader than Kelso's nuts this summer, I'm going to dispense with that requirement.  'Crusty' need only post follow-up advice through Wednesday, including a trailing stop and partial profit-taking advice. If he is showing a profit by Wednesday's close, he can claim his prize. ...and We're Short in DIA Incidentally, I took a stab a shorting the Mother of All Bear Rally Tops myself with a recommendation that you buy September 126 QQQ puts if the underlying vehicle poked its ugly  little head above 129.51.  This was to have been the culmination of a 500-point rally that I'd predicted for the cash Dow. Because the Diamonds actually topped at 129.71 on Thursday and have sold off hard since, I have established a tracking position in the Diamonds:  four September 26 puts @2.12.  Since all puts have been longshot bets since they first began to trade in 1973, I have also recommended taking a partial profit on the puts today, predicated on a little  more slippage in the underlying.  You can learn how to do this stuff yourself! Click here for information about the upcoming Hidden Pivot Webinar and also receive a $50 discount coupon.

The futures are falling after having gotten no higher than 1376.00 -- fully ten points shy of the 1386.25 target I'd been using as a minimum upside projection for this phase of the Mother of All Bear Rallies.  Strictly speaking, that target and a couple of others ranging up to 1397.75 remain valid. However, at the instinctual level, perhaps because I've been waiting since summer began for the stock market to drop the hell dead, I am tempted to believe that shares are about to take a very nasty tumble.  Regardless, I'll be closely monitoring the hourly chart for clues. Most immediately, a print at 1385.25 today would signal that buyers are back on the attack, while a fall to 1296.75 in the days ahead would suggest the contrary -- i.e., that sellers are gaining momentum. The significance of both numbers is shown in the chart.

December Corn tore through a major Hidden Pivot resistance yesterday, implying the outlook could grow even worse this summer for beleaguered farmers.  The technical damage can be seen in the new chart accompanying my updated corn tout.  You should also check out the update for IBM, which is also close to a breakout. If one should occur, the stock, along with Apple, would likely drag the entire stock market higher.   Click here for a free trial subscription to Rick's Picks.

Granted, the futures did what we asked of them yesterday, pushing above four prior peaks on the lesser charts to create a bullish impulse leg on the daily chart.  But when they gamely pushed for a few extra yards, they stalled a hair below a fifth peak at 1592.30 (15m, 12:45 p.m. on July 17), losing their nerve -- and momentum. And now, early Friday morning, they are repeating this display of timidity, having failed by two ticks to exceed the look-to-the-left peak at 1585.10 (3 min, 1:24 p.m., July 19) highlighted in the chart. Accordingly, our bias should be moderately bearish for the very near term, tied to the 1570.90 downside target shown.  Camouflageurs can short off the 3-minute chart -- but also bottom-fish at p (1577.90) and/or D.  Learn how to use 'camouflaged' entry signals to dramatically reduce risk. Click here to find out about the upcoming Hidden Pivot Webinar and get a $50 discount coupon on the home page.

After a day of meaningless ups and downs, the futures were drifting toward the lower end of the range early Friday morning.  There were two reasons to think a bullish turn was imminent, however: the 1367.00 'D' target shown, and the implied structural support of Thursday's intraday low. Night owls can attempt to leverage the former, which so far has held as the overnight low.  I'd suggest using the 3-minute chart for camouflage, since there are some nicely formed external peaks starting at around 10:15 p.m. EDT.  Keep in mind that you'll be shooting for gains of as much as 30 points, based on the topmost target of several given here earlier. They lie within an 11-point range, the first of them at 1386.25, and the next at 1388.00.