December 2012

February Gold looks like a veritable cinder block on the hourly charts.  You could pray for the print at 1677.90 that it would take to turn the hourly chart impulsively bullish, but if you're a man or woman of action, check out the chart accompanying today's tout, since it offers a graphic picture of a 'camouflage' set-up that would be worth shorting. Click here to sample Rick's Picks free for a week.

The village idiot wouldn't be fooled by the blatantly distributive quality of Gold's recent price action: three days of tortuous, mincing steps higher to recoup ground that was lost in just a few hours last Thursday. You can watch from the sidelines -- or more aggressively, short this brick on a camo-signal from the lesser charts. As of the moment, it would require an impulse leg exceeding low #1 (1657.30), though not #2 at 1653.00, before we'd take an interest.  If you'd prefer to be bullish, set the snooze alarm for 1677.90, since that's where a bullish impulse leg would be generated on the hourly chart. Click here for information about the upcoming Hidden Pivot Webinar and a $50 discount.

[Turns out it was our own Doug Behnfield  -- good friend, astute financial advisor and occasional contributor to Rick’s Picks  -- who in June 2010 coined the term “fiscal cliff.”  Readers may remember his essay, which took its inspiration, metaphorically speaking, from the suicidal ending of the film Thelma and Louise.  In the guest commentary below, with the U.S. a literal inch from the cliff, Doug describes a likely outcome. One thing’s for sure, he notes: No amount of political squabbling will spare us the very real economic pain it will take to bring the national budget into balance. RA] Recently, I was back in Connecticut visiting my mother. She doesn't have a computer and hence, no internet. As a result, I relied on my Smartphone and an "app" to check in on financial news most of the time. On one particular day, I noticed that every single news item contained "Fiscal Cliff" in the title or the text. It reminded me that it is rarely the problem staring us in the face that affects the markets. It is the one lurking in the shadows, grasping a two-by-four. Lately, mainstream economic forecasts for economic growth for the current quarter have dropped below 1%. The recession may have begun. An agreement not to do anything right now on tax increases and spending cuts has probably been priced into the market. A recession has not. I also recalled that I had used the Thelma and Louise analogy some time ago in one of my quarterly commentaries. [Note: It ran here in June 2010 under the title Thoughts on the Great Society.]  Apparently, I was the first one to coin the term, more than a year before Alec Phillips came up with it and almost two years before Ben Bernanke popularized it. "The

It looks like bullish seasonality is about to get trashed in the final week of 2012. Monday's performance was abysmal for a Christmas Eve trading session, and Wall Street's mood is unlikely to improve with Obama off vacationing in Hawaii and fiscal-cliff fears an inch from erupting into panic. It'll be interesting to see how DaBoyz attempt to meet this challenge, since the stock they will be most keen to mark up, Apple, has been leaden.  Click here to get Rick's commentary and a detailed trading recommendation delivered free each day.

The 1405.25 target flagged here earlier is still my minimum downside objective for the near term as well as a good place to try bottom-fishing. You can do this with camouflage, or alternatively with a straight bid at 1405.50 and a three-tick stop-loss.  To view the chart associated with the target, check Friday's tout  in the archive, since nothing of substance has changed.  _______ UPDATE (December 26, 8:52 p.m. EST): Subsequent price action has lowered our correction target a tad, to 1403.50.  This new Hidden Pivot support can be traded as suggested above -- either via 'camouflage', or with a straight bid and three-tick stop-loss. _______ UPDATE December 27, 10:56 a.m. EST):  To paraphrase Lawrence Welk: suh-prize suh-prize!  The futures have bounced 4 points so far from a low at exactly 1403.50. Since I'd suggested a three-tick stop-loss off a straight bid, you should have exited half of an assumed four-contract position at 1406.50. For now, use a 1402.50 stop-loss for the rest. UPDATE (11:31 a.m.):  We exited the remaining two contracts on the stop for a theoretical trading gain of $200. The breach of the midpoint implies that the downtrend will continue at least to its 'D' sibling, 1378.50.

Stocks are unlikely to do much during Monday's 'lame-duck' holiday session, but I've provided a tradable correction target in the E-Mini S&Ps nonetheless. I'll be taking the day off, so let me wish you a merry Christmas a day early. The weekly tutorial session will be held on Wednesday as scheduled.

For now, we'll put aside a 1631.80 downside target missed on the last swoon. However, that doesn't necessarily make Feb Gold a strong bet to continue Friday's moderate rally. Notice how the intraday high failed by a couple of ticks to surpass the look-to-the-left 'external' peak at 1660.60 recorded a day earlier. This is chicken-hearted action, and it should temper our enthusiasm for jumping on the long side if the opportunity to do so is less than ideal.  Camouflageurs will not have much cover if the external peak is exceeded today, since the breakout will be just as obvious to everyone else.

The 5-minute chart (see inset) shows why a relapse to 1405.25 seems logical at the moment. Because this midpoint pivot lies in the middle of nowhere relative to any 'structural' supports, you can bottom-fish it with a stop-loss as tight as three ticks. Camouflage is preferred, though, and if you're planning on doing it that way, I'd suggest looking for your opportunity on the 5-minute chart  or less.  Click here to sample Rick’s Picks, the chat room, daily trading ‘touts’ and impromptu online trading sessions for free.

Assuming the 1391.25 low is a valid print, tonight's shakedown ranks as one of the more brazen in the sordid annals of U.S. markets. Notice, however, that the scumbuckets who orchestrated this crime used a 1390.50 low from a couple of weeks ago to apply the brakes.  Because the dive stopped three ticks shy of that low, it failed to achieve the status of bearish impulsive leg on the daily chart. This distinction could prove to be academic if Congress actually pushes our already doomed economy over the cliff.  For now, though, we'll assume that lower lows are most unlikely in the weeks ahead unless the proposed tax increases and spending cuts are allowed by Congressional inaction to hit full-force. That would be a far cry from the kick-the-can outcome we've been expecting, but perhaps we should not have underestimated Obama's radical zeal for deliberately creating the kind of crisis that only Big Government can "solve".  Click here to sample Rick's Picks, the chat room, daily trading 'touts' and impromptu online trading sessions for free.