July 2012

The September Euro looks like it will be trading a penny lower before it summons the energy for a dead-cat bounce. The elongated C-D segment leaves something to be desired aesthetically, but it should serve nonetheless to provide us with a decent place to go bottom-fishing.  Camouflage is a must in this case, and so I'll suggest looking for it on the lesser charts if and when the decline hits 1.2242.  That's 17 ticks above the actual Hidden Pivot support, but there's nothing to lose by being alert to a possible turn at that point.  _______ UPDATE (July 12, 1:05 a.m. EDT):  The futures have made a fragile bottom three ticks from the 1.2225 Hidden Pivot implied above.  There have been no handholds on the lesser charts for a camo entry, so I'll assume nothing done.  However, if you used my target to buy near the low on your own initiative, I'd suggest taking off half the position at current levels of around 1.2253 and stopping the rest so that no loss is possible.  Please note that bulls won't be in the clear until such time as this vehicle leaps the 1.2295 'external' peak made yesterday on the way down.

Monday's tired action changed nothing in the immediate forecast. From a technical standpoint, it merely extended a B-C correction that is capable of launching a rally to 1404.00.  If you're looking for a way to get long, I'd drop down to the three-minute chart when the 'x' trigger shown gets hit.  An alternative for night owls would be to attempt it on the 5-minute chart, were a promising abc uptrend was developing in subtle fashion arpund 5:45 p.m. EDT.  Want to learn how to do this stuff yourself? Click here for a free trial subscription to Rick’s Picks.

Savers and retirees aren’t the only ones getting screwed by interest rates that have been artificially suppressed by central banks around the world.  These days, banks themselves are finding it increasingly difficult to earn even a nominal return on instruments they consider safe. Just last week, Denmark’s Nationalbanken set its deposit rate below zero for the first time, effectively charging commercial banks and others a fee for parking their surpluses in krones. There are numerous reasons why the krone would be a magnet for idle money. For one, Denmark’s economy is among the strongest in Europe. Also, because Danes rejected euro-zone membership in 2000, they enjoy a degree of political and economic autonomy that their neighbors do not have. This will presumably make Denmark less susceptible to the shock waves that follow the inevitable implosion of Greece, Spain, Italy et al. Small wonder, then, that the global stewards of OPM would consider the krone a safe haven even though it now guarantees them at least a small loss on their money. From Denmark’s standpoint, the decision to follow the European Central Bank’s latest rate cut was unavoidable. The alternative would have been to sit idly by as the krone appreciated, hobbling the country’s exports and destabilizing its balance sheet. Meanwhile, those who have been predicting hyperinflation should have noticed by now that the trillions of euros that have been injected into the banking system are having the opposite effect. For in fact, all those euros have merely weighed down the return on capital with a mountain of liquidity for which there has been no market demand. Moreover, as benchmark rates around the world sink below zero, the U.S. Fed’s vital objective of managing (i.e., promoting)  inflationary expectations lies nakedly exposed as a failure. Under the circumstances, the odds of inducing

Today's Apple tout, accompanied by an eye-opening chart, is intended to temper your bearish bias on stocks (as well as mine).  Last week's rally blew past two previous peaks and could easily take out two more before the stock pauses for breath. If this happens, it seems entirely likely that the broad averages will follow Apple's lead. Unable to access the tout?  Try a free trial subscription to Rick's Picks by clicking here.

Apple went bullishly impulsive on the daily chart with last week's surge, but buyers could turbocharge the effect with just a small, further push past the two peaks shown (labeled #3 and #4).  A pullback today would diminish the implied power of the move, but even then the stock would remain an even-odds bet to test -- and eventually exceed -- the all-time high at 644 recorded in April.  If this were to occur, it would be most unlikely for the broad averages to languish, let alone decline.

The rally begun in late June looked promising at first, since it visibly interrupted the long dirge from February's 37.450 high. However, last week's selloff suggests that bulls are too tired at the moment to do much more than hold their own.  Although the duel in evidence (see inset) may keep the futures from flirting with the recent low at 26.150, bulls will need to push this vehicle above June 20's 26.650 peak this week to suggest they are capable of a sustained move.

The futures are trading moderately higher early Monday morning but presumably constrained by the range in which they have  seesawed for more than two months. Higher or lower today looks like a coin toss at the moment, although the 30-minute chart supports a bearish bias for night owls that is predicated on the 1564.10 downside target shown. Like to get on top of the markets in real time? Click here for a free trial subscription to Rick’s Picks.

With bulls and bears locked in a tiresome duel on the hourly charts, traders can play either side of the market, but I'd suggest coming to the task with low expectations.  Early Monday morning, even the three-minute chart yielded no high-odds plays -- only a feeble-looking impulse leg followed by a useless succession of point 'C' lows. A run-up to a previously aired target at 1404.00 is still possible over the near term, but that number is losing its heft as a reason to attempt camouflage.

If you're looking for good reasons to be bullish right now no matter what the news, check out the well-hidden impulsiveness of the Dow's hourly chart.  The pattern shown is a dandy -- as persuasive as it is subtle -- for camouflageurs seeking to get long.  A point 'C' low has yet to become manifest, but if and when it does via the creation of an 'x' entry signal, I'd suggest using the first uptrending abc pattern you can find on the three-minute chart to get aboard in the Diamonds or another comparable vehicle.  _________ UPDATE (12:09 p.m. EDT):  It's fascinating how quickly an incipiently bullish picture has turned bearish now that today's nasty downdraft has negated the ABC rally I'd sketched hypothetically. The hourly chart now reflects a duel that bears are winning.  Although the larger ABC rally going back to A= 12480 on June 28 is still intact, the fact that it took two running starts to get past two sets of 'external' peaks recorded, respectively, on May 8 and May 10 tells. If the current selloff reverses to produce a nice point 'C' low, we'll want to short the midpoint very aggressively, for it would be a logical place for a bull trap to get sprung.