November 2012

Night owls may get a good opportunity to short the E-Mini S&Ps, since its  weak bounce from yesterday's lows was approaching an important Hidden Pivot midpoint. Check out the tout and the accompanying chart for further details. (And click here for a free trial subscription that will allow you to follow this  gambit in real time.)

I'd say odds are slim to none that the futures will avoid falling to the 1364.50 target disseminated via yesterday's update. This could spell opportunity for us, however, since, as I made clear during yesterday's tutorial session, the bounce from the 1384.00 will be shortable near the p midpoint -- now resistance -- at 1399.25.  If and when it's reached, I'll suggest initiating the trade using camouflage on perhaps the one- or three-minute chart. ______ UPDATE (2:41 p.m. EST):  This one was a dead-center bullseye, since the high of the bounce from Wednesday's 1384.00 low was 1399.75.  Some chat-roomers reported having gotten short, so the value of the midpoint was not merely hypothetical. For your further guidance, I am establishing a tracking position of two contracts remaining from an original position of four. If you take profits on half of the initial four here, near 1380.00 it will yield an effective cost basis of 1418.00 for the two contracts that will remain. For now, tie them to an impulse-leg stop of hourly degree. This implies exiting on a rally that is unpaused between two 'external' peaks at, respectively, 1397.50 and 1399.75.

The election will have enormous consequences for investors. From a technical perspective, and to put it mildly, it doesn’t look good for the broad averages. However, a detailed technical look at some popular stocks during this one-hour session revealed that there will be bullish opportunities nonetheless in certain stocks, including Facebook, Priceline and Amazon. Gold futures, meanwhile, look like they will meander sideways at best. If you’re looking for forecasts that are bold and precise, I invite you to review this post-election look at the markets using Hidden Pivot Analysis.

We hold 12 March 30 calls acquired for 0.50.  For now, do nothing further. The stock's reluctance to join in yesterday's election day gambol was understandable, given the unmitigated shellacking visited on those who got suckered into buying October 24's hysterical rally.  That day's opening bar produced as nasty a short-squeeze as we've seen in a long while, creating a top at $25 that was fully 28% above the previous day's close of $19.50. The institutional thieves and thimble-riggers who sprang this bull trap had been looking for a way to exit Facebook since the memorable day in mid-May when the company's IPO laid an egg. They got it in spades with the short-squeeze, but it left a lot of shareholders smarting and distrustful. With yesterday's strong rally in the broad averages to keep Facebook buoyant under continued selling, disappointed investors had a good opportunity to quietly unload. Now that the nervous Nellies are out, we can look forward to perhaps a little more base-building near current levels before the stock embarks on the rally I've said will acknowledge the promise of Facebooks new-and-improved revenue model (see my previous FB tout in the archive).  

From a technical perspective yesterday's rally was particularly interesting (see inset), since it left the E-Mini S&Ps sitting somewhat above a key resistance at 1420.75 that I'd flagged in an earlier trading tout. In theory, E-Mini's settlement 5 points above the resistance implies that a major rally equivalent to as much as 800 Dow points could be brewing. In that context, consider that a Democratic victory in a presidential election typically produces a 2.5% decline in the broad averages; a Republican victory, a 2.5% rally.  It is of course a wild leap to call the election on the basis of speculatively bullish price action near a middling Hidden Pivot resistance, and so I'll resist the temptation to do so.  Readers who have gotten this far will perhaps pardon me for a little bit of Hearst-inspired sensationalism in the headline.  _______ UPDATE (12:43 a.m. EST):  Since I am unable to imagine an Obama rally, I'll be paying very close attention to the way in which the ostensibly bullish set-up described above plays out. The very first credible sign of trouble would come today on a  1409.50 print, since that would generate a bearish impulse leg on the hourly chart. ________ UPDATE (10:20 a.m.):  A 2.5% decine would bring the Dow down to 12913, about 35 points beneath the low created by today's so-far 230-point fall.  Since I can scarcely imagine the stock market declining a measly 2.5% to discount the actual Death of America, I'll continue to monitor my technical indicators closely, and to trust them over my gut instincts. FYI, the E-Mini S&Ps, currently trading near 1400.00, project to 1364.75 over the very short-term.  This implies a drop in the Dow of 500 points -- twice the current amount.

What a joy it will be to wake up Wednesday knowing that the longest campaign in history is finally over – and with it news coverage that for many of us has become about as interesting and essential as a backed-up toilet. If I didn’t have to stay on top of this stuff in order to write about it knowledgeably, I’d tune it out completely and spend my time immersed in masterpieces of modern fiction that I’ve wanted to revisit since college: The Magic Mountain; In Search of Lost Time; The Snows of Kilimanjaro; How It Is; Tender Is the Night; Pale Fire; The Sound and the Fury. Alas, if I am going to continue to pay the bills, one leg will have to remain at least knee-deep in the tiresome, wretched muck of politics. At the moment, the top Google headline is a good indication of how desperate the newsmongers are to bring us yet one last gasp of “news” about the election at the eleventh hour:  “Votes of Independents Could Be Key”.  Um, well, yes, I hadn’t thought about that. A fresh angle!  Yeah, about as fresh as a rodent that has curled up and died behind your living room wall.   The news media never tire of telling us things we’ve either heard a hundred times before or that we never needed to hear in the first place.  Such as: Tips for Swimming in Shark Infested Waters.  “Are you ready for the first “do”? nightclub comedian Lenny Bruce used to ask.  “Get out of the water!”  “And here’s tip number two:  Try to ward off the shark with some object.  “Yeah,” quipped Bruce: “Like the stump of the other leg the shark didn’t get.” Annoying Headlines For those who have completely had it with campaign coverage, Google has

Impressed with yesterday's $37 surge?  You shouldn't be, at least not if you're counting 'external' peaks that were exceeded on the daily chart. The total was zero, making the rally a non-event so far, technically speaking. As I noted in the chat room, it will take an unpaused thrust exceeding 1755.00 to create a bullish impulse leg on daily-chart degree. That doesn't mean we should disdain the rally, only that we should keep some skepticism in reserve until buyers do what we need them to do in order to persuade us they're not going to fade in the stretch. In the meantime, I'd suggest monitoring the hourly chart to assess buyers' enthusiasm. The pattern shown had not triggered a 'buy' signal when we went to press, but if and when it does, price action at 'p' will be crucial to our outlook for the near-  to intermediate-term.

The opening segment of the Hidden Pivot Course will be conducted tonight as scheduled, albeit with an Election Day starting time at 6 p.m. Eastern, two hours earlier than usual. Marilyn will be on hand to assist registrants if there are any problems accessing the virtual classroom  See you there!

A soft landing down around 81.00 is augured by the following coordinates, prominent on the daily chart: A=101.01 (9/14); B=88.09 (10/3) and C=94.02 (10/10).  The exact Hidden Pivot target lies at 81.10, with an 87.56 midpoint that has become resistance.  The most recent rally brought the futures to within 14 cents of that midpoint, producing a reaction that could have been shorted via camouflage without too much stress. I have highlighted the picture-perfect opportunity that occurred on the 10-minute chart.