July 2012

There were two good trades possible yesterday as the futures once again screwed the pooch, first by heading lower, then higher.  All of it netted out to zero, which is what the majority of traders will likely have made (less commissions) over the course of the day.  Today, the futures could feint lower, testing all-too-obvious support between 1300 and 1310 from late June; or they could rally. If the latter, the 1359.00 midpoint resistance of the pattern shown is where the picture for next week would begin to look interesting. A close above it would be a harbinger of a bullish week to  come, with a target projection at 1388.00 that would be equivalent to a 500-point Dow rally. It's quite speculative at this point, but camouflageurs could look for a way in as early as 1337.00, the 'X' trigger. Want to learn how to do this stuff yourself? Click here for a free trial subscription to Rick’s Picks.

Today's tout for the September E-Mini S&P spells out exactly what would need to happen for the broad averages to embark on a powerful rally -- one equivalent to about 500 Dow points.  For access to this information, along with a free week's trial subscription to Rick's Picks, click here.

Yesterday's rally, which fell 50 cents shy of the target shown, did little to change the bearish picture for the short-to-intermediate-term.  However, if bulls can finish the week with just a modest push, it would give them a fighting chance to forge even higher next week. Specifically, they'll need to push this vehicle above the 1587.20 peak "along the wall"  of Tuesday's steep selloff.  Camouflageurs are encouraged to make hay if such a rally pulls back in B-C fashion from just above that peak, or from just above the next at 1590.20.

[The stock market has been so miserably stupid and boring lately that it barely warrants a claim on our attention.   So let’s talk instead about something that truly does matter:  fracking.  I must confess that most of what I knew about this subject came from sources like the Wall Street Journal that are perhaps a little too friendly toward fracking.  Decidedly un-friendly is one Cliff Willmeng, author of the letter below to the editor of the Colorado Hometown Weekly. I am republishing it for two reasons: to alert those of you who were as ignorant as I was to the risks of fracking; and to elicit the usual, spirited discussion from readers. Also, for counterpoint, here’s a link to a strongly pro-fracking piece that I found online.  RA] I would like to write in regard to the topic of hydraulic fracturing that is bearing a weight down on Boulder County, its neighbors to the north and east, and on Lafayette. The practice of fracking is an industrial activity that uses more than 600 chemicals, millions of gallons of water, and utilizes the air around wells as a dumping ground for volatile organic compounds such as benzene, a known cancer causing agent. The oil and gas companies are using the state government as a proxy to push this practice into communities across the front range. Boulder County, and particularly Lafayette and Louisville are the next towns slated for drilling as both lay above the Wattenberg Shale. Fracking is exempt from all major environmental regulation and will pollute our community's air and water to the point where raising families here will become questionable at best. It will lower property values, strain our infrastructure and dismantle the community as we know it, all to make gas companies wealthy. This practice does not belong

The September contract broke to new lows after having held above a Hidden Pivot support  at 1.2225 for most of a day.  This is bearish on its face and suggests more downside to as low as 1.2073 over the near term.  There are numerous other, lesser patterns, but if you're looking to bottom-fish I'd suggest using “camouflage” for all but the one noted above, which can be bought with a stop-loss as tight as eight ticks. _______ UPDATE (July 16, 12:36 p.m. EDT):  The target is still valid, but because an upward correction begun on 6/13 has made it less attractive as a place to try bottom-fishing, I am no longer suggesting it.  The bigger picture remains bearish because of the breach of 1.2225 noted above.  ______ UPDATE (July 26, 10:12 p.m. EDT):  The futures have in fact continued to plunge -- most recently, to a 1.2051 low that exceeded my target by 0.0021 cents. This is bearish on its face, and the upward correction so far looks somewhat timid because of its failure to breach an 'external' peak at 1.2190 recorded July 20 (60m) on the way down.

Keep in mind that the selloff thus far from Monday's $620 high is all bullishly corrective relative to the $565 low recorded on June 28. It'll take nothing less than a $13.56 booster rally to get this stock launched, but the upside potential over the near term would be to new all time highs above $644.  Accordingly, we should look to get long via camouflage if and when the point 'X' of the pattern is triggered.  I may suggest buying calendar spreads at a far-out-of-the-money strike, so stick with this one if you're interested in seeing how that strategy can dramatically reduce risk.

Apple is arguably the key bellwether for the U.S. stock market right now, and that’s why we are monitoring its vital signs very closely. Over the last two days, although the broad averages have fallen along with Apple shares, the stock left a bullish marker on the daily chart before it began to recede. With weak earnings reports due over the next several weeks, our gut is saying “Sell everything!” However, you’ll see in this recording why there are reasons to believe the stock market may be developing thrust for another leg up.

Bellwether Apple looks like it's loaded with shorts, and if they should push the stock above a small external peak at 609.17 today, market bears had better dive for cover. Webinar grads please note: I've posted the recording for yesterday's tutorial session, which featured a heavy emphasis on Apple's technicals.

I must have missed whatever news has been driving this hoax higher, but if it reaches the 90.53 target shown, let's plan on getting short via camouflage. You should start looking for the turn at 90.10 or so. Please note that the 87.09 midpoint would also be short-able via camouflage, but it would be riskier to do so once the futures have poked above the look-to-the-left peak at 87.13.  _______ UPDATE (July 19, 2:53 a.m. EDT): The futures have traded as high as 90.72 -- just within the 21-cent margin I usually allow this vehicle at Hidden Pivots on intraday charts. (The relatively wide leeway is why we don't trade crude very often.)  Camouflageurs should look for opportunities to get short on the one-minute chart.  As of this moment (i.e., 2:53 a.m. EDT, July 19) the futures have just tripped a perfect entry signal at 90.57 with a 'p' midpoint support at 90.54 and a D at 90.48. If any night owls have filled, please let me know in the chat room so that I can establish a tracking position for your further guidance.  Please note that I've refreshed the chart to show up-to-the-minute action. (Note: No one stepped forth in the chat room, so I have not followed up with a tracking position.) _______ UPDATE (July 19, 2:36 p.m. EDT): With today's upward explosion, we'll need to shift our analysis to the daily chart. It says the rally will continue to at least 95.35 (or 95.68, basis September).  The rally at this point is obviously more than the hoax I'd assumed it to be, although I am baffled by its cause.  Assuming we can safely rule out supply/demand factors arising from a global economic recovery -- quite the opposite is occurring, actually -- we are stuck with geopolitical reasons.