January 2013

Are T-Bond futures breaking down?  It’s important that we get it right, since, if they are and market forces are about to lay bare the biggest financial shell game in history, we want to be watching from the sidelines when the inevitable panic erupts.  From a technical standpoint, the key number to watch is 143^29, a “Hidden Pivot” derived from our proprietary runes. If this support were to fail we would infer that the selloff had significantly further to go, presumably to at least 141^09, before bulls would have a chance to reverse the tide. By then, however, it could be too late to calm the herd. Interest rates on the long bond would be up by about 25 basis points, to around 3.25 percent, and although that would still be shy of the 3.50 peak recorded last spring, it could suffice to unsettle equity markets and squash a a delicate uptick in real estate that has relied on massive infusions of credit created out of thin air by the Federal Reserve. At the very least, it would give pause to share buyers who have so far gotten 2013 off to a rousing start. To be sure, T-Bonds have pulled out of tail spins before. Early in 2011, they reversed a nasty decline that had threatened to derail the banking system’s recovery from the Great Financial Crash.  And they did so again later that year, saving the day for a mortgage market that might easily have relapsed. This time, however, although T-Bond futures are not in a steep decline, weakness has persisted since summer. Because of this, the markets are in poor shape to withstand whatever shenanigans Obama and the Democrats attempt to pull in lifting the debt ceiling.  In fact, the carelessness with which the subject is being debated

A pattern similar to the one driving Feb Gold right now has the potential to power this vehicle to the 32.550 target shown over the near term -- or even to 32.795 if it's exceeded. For purposes of getting long, camouflageurs will have to show ingenuity, since easy opportunities on the lesser charts were close to exhausting themselves shortly after midnght EST.

There's possible excitement brewing in February Gold (and March Silver as well) in the form of the first bullish impulse leg we've seen in two months. Check out today's tout and the chart that accompanies it to see at exactly what price this would occur.

Last week's rally topped just four ticks from the 1697.80 target shown. The consolidation since then bids fair to push the futures, over the near term, to 1714.70, a Hidden Pivot target that will become an odds-on bet if and when its 1699.00 midpoint sibling has been exceeded even slightly. The relevant coordinates on the 30-minute chart are: A=1666.40 (9:30 a.m. on January 17); B=1697.80 and C=1683.30.  If the futures break above the target, the 1727.00 midpoint of a larger pattern would be in play (daily chart, A=1598.00 on August 14). Please note, however, that it will take just 1704.40 to generate the first impulse leg we've seen on the daily chart in two months.

Subscribers should still be holding a single contract with a cost basis effectively reduced to 1433.50 by partial profit-taking advised along the way.  The position missed the 1470.25 stop-out I'd advised by a single tick on Friday, but a rally since then will have raised the stop to 1479.50 (see inset).  Since this price could get hit in off-hours trading Monday night, I am disseminating this tout in the chat room and to all who have signed up for E-Mail Notifications.  If you exit on the stop, the theoretical gain on the trade would be $2300 per contract. You can do this stuff yourself, and it's easier than you might think. Click here for information about the next Hidden Pivot Webinar.

In today's commentary concerning the bonds, to keep things simple I did not explain the concept of the impulse leg, nor the distinction between internal and external lows. Suffice it to say, an uncorrected fall to the 141^09 target shown would exceed one of each, generating quite a bit of downforce on the daily chart.  You can see this for yourself in the downsized version of the chart, reproduced here for the edification of subscribers. 

U.S. markets will be closed on Monday in observance of the Martin Luther King holiday.  Touts and commentary for Tuesday will be out Monday night. Enjoy your day off!

Although I've drum-rolled a short in the E-Mini S&Ps, it must be noted that DIA looks unstoppable at these levels. Even so, we'll still have a compelling target to short at 140.71, the Hidden Pivot target of the pattern shown. Based on the way buyers shredded the p midpoint at 132.57, this vehicle seems extremely likely to get there, notwithstanding the stall that I'm expecting in the S&Ps right here.  If the target is achieved it would represent a 3.6% rally from current levels -- in line with the last-gasp rally that I've said could take the E-Mini as high as 1548.25. In any case, we'll keep 140.71 in mind as a place to short aggressively. We'll likely do so by legging into a put spread, or perhaps a butterfly at a much lower strike. Notice as well that any progress above the 140.71 target would encounter the presumably considerable stopping power of an even larger pattern with a D target not far above it, at 141.66.  Taken together, these two clear and important Hidden Pivots suggest the long-term bull is near an end. _____ UPDATE (February 5 at 12:52 a.m. EST): The 139.89 crest of Friday's hysterical short squeeze narrowly missed our target, although 'camo' traders could have initiated the short.  If you did so, please let me know in the chat room. If I hear from two or more traders, I'll establish a tracking position. _______ UPDATE (February 12 at 1:53 p.m. EST): The Diamonds are getting close to our longstanding target at 140.71, having traded as high today as 140.21. Let's stake out a low-risk short position by buying the June 130-March 130 puts spread a dozen times for 1.50. (Use the options that expire on the third Friday. Some traders have jumped the gun, but keep

I've drum-rolled a possible top here because there are three fairly important Hidden Pivot rally targets clustered within a 12-point range in the E-Mini S&Ps. Add in the presumably formidable round-number resistance posed by  1500, and there's a case to be made that this could be it for a bull market that has been driven by global financial fraud of epic scale.  We shall see. In any case, it's worth taking a shot at getting short here, provided we stick to our exit plan.