October 2014

The stall at the 1949.25 midpoint resistance (see inset) suggests the futures are consolidating for a follow-through to 1978.25. Night owls could have a chance to board ahead of the rally by bottom-fishing the Hidden Pivot support of a downtrending abc pattern. At the moment, this would imply bidding 1935.75 (15-min, a=1956.25 at 2:30 p.m. EDT) with a stop-loss of perhaps three ticks. The 1942.50 midpoint support of the pattern has already been breached, and although it would require a nasty takedown overnight to hit its 'D' sibling, that's still the most conservative place to try to get in. Otherwise, you can attempt to enter with the trend using a signal from the 1-minute chart. _______ UPDATE (1:30 a.m.):  My hunch is that the headline "Ebola Hits NYC" Thursday night caused the futures to overshoot my target. Instead, they fulfilled the somewhat lower target of this gnarly pattern within a single tick: (15-minute)  a=1956.25  (2:30 p.m.); b= 1941.50; c= 1946.75. DaBoyz have turned the dive into a swoon with a so-far 12-point rally, but they may be pushing their luck to shoot for any more.  It's not just Ebola, or even Ebola plus the hatchet-wielding jihadi psychotic in Queens -- it's just the feeling, as the week draws to a close, that the pace of disturbing events around the world is spinning out of control.

My gut feeling is that the short squeeze off last week's low is a bear rally, albeit a quite powerful one. As a practical matter, however, we've been scalping it from both the long and the short side, using targets provided in the chat room and in updates to my touts for DIA and the E-Mini S&Ps. If you want to get in on the action but don't subscribe, consider taking a free trial subscription. This will also give you access to Friday morning's "Jackpot Bet" session, for which I will provide a link in the chat room at 8:45 a.m. EDT.

Amazon's latest earnings have missed on both the top and bottom line, sending the stock into a steep dive in after-hours trading. The global retailer's shares have traded as low as $272.50, off $40 from a $313 close. Although this exceeds any downside target I could have projected using the intraday charts, the weekly bars leave room for a little more downside to 266.12., a clear Hidden Pivot support. The stock would become a screaming buy at that price, albeit with a very tight stop-loss, since the bounce could go as high as 315.49.  The operating loss for Q3 was $544 million, or about 0.95 per share; a loss of 0.74 had been expected.  The company also confirmed buzz that the "Fire" smartphone had laid an egg -- to the tune of a $170 million write-down, with $83 million of unsold units still in inventory. ______ UPDATE (October 28, 8:38 p.m.): I put out a 305.25 rally target in the chat room but see the move as corrective. As such, the 266.12 target will stand unless 364.85 is exceeded to the upside. _______ UPDATE (October 29, 9:16 p.m.): An opening bar head-fake trapped bulls, then negated the 305.25 correction target on the way down.  The short-term picture is still bullish, but not sufficiently so to warrant a play.

DaBoyz got tired of holding stocks up yesterday when short-covering failed to materialize on day five of what has been a pretty nasty squeeze. The selling could always snowball and provide more refreshing relief for bears. But for those who went home short on Wednesday, I've provided a risk-management tool for DIA that can be interpolated for any market-short position. Check out my tout for further details.

There was nervousness in the chat room about missing the next big rally. To avoid this, if the opportunity should arise, I'll suggest using camouflage to get long -- albeit not in the same size we would if buying at a 'D' correction target. A 'b-c' pullback from just above peak #3 would set up the trade, but please inquire in the chat room if you are not confident about how to proceed. Since we're trying to leg into vertical call spreads, we'll start with some cheapies for under 0.60. That could mean going as high as the 125 or 126 strike to open the position. The goal thereafter, presumably on a strong rally, would be to sell options two or three strikes higher for as much as we've paid for the long side of the position.  We'll start with four contracts, but I may suggest stepping up the size if the entry looks sufficiently promising. _______ UPDATE (10:33 a.m.): TLT went lower, so we did nothing. The ease with which sellers cracked the 120.03 midpoint support of the pattern shown implies more slippage to the 118.20 target.  If this vehicle gets there, it will be an excellent place to try bottom-fishing aggressively, legging into the long side of our intended vertical spread. Stay tuned. Pivoteers should also notice that a rally back up to p=120.03 would be a spec short.

The failure of Tuesday's rally to reach the modest, 1260.30 Hidden Pivot target we were using as a minimum upside objective is not exactly a sign of robust health. The target remains theoretically viable because the point 'C' low at 1232.00 with which it is associated is still intact. However, the hourly chart has swung bearishly impulsive as a result of the ratcheting, two-day sell-off from the recent high at 1255.60.  Short-term downside potential is to the 1232.30 target shown. If this Hidden Pivot support is easily breached, however, it would suggest more sellers are waiting in the wings. Alternatively, the futures would need to surpass 1246.30 without having first touched the 1239.30 midpoint support (see inset) to turn the hourly chart short-term bullish. _______ UPDATE (October 27, 8:01 p.m. EDT): I expect the next leg down to reach the 1216.40 Hidden Pivot support shown.  Alternatively, a print today at 1236.30 would give bulls a fighting chance. _______ UPDATE (October 29, 1:23 p.m.): 1202.10 is my new downside target -- a Hidden Pivot support identified during this morning's weekly tutorial session. _______ UPDATE: An 1125.00 target broached yesterday during my regular interview with Al Korelin should suffice to keep you out of trouble. I hadn't imagined the futures would get halfway there overnight.

Bears shouldn't break out the bubbly yet, since bulls were not exactly diving for cover yesterday; they just seemed a little fatigued after it became apparent around mid-session that there wasn't enough short-covering nervousness to move the broad averages higher.  That's understandable, considering the squeeze was in its fifth consecutive day. Now, we should look for DaBoyz to manipulate stocks lower in order to "discover" a price at which selling dries up. This is a dynamic process, since the news environment will be changing, and the selling could conceivably start to feed on itself if it shows any success. For the moment, however, given the precise bounce off  a 1919.75 Hidden Pivot support (see inset), short-term, technical signs are neutral. My gut feeling is that night owls will enjoy better success positioning from the short side nonetheless, but set an alert  just above the two numbered peaks, since that's where any rally would turn menacing.

Ordinarily I'd say the lunatic stocks favored by institutional traders (i.e., PCLN, BIDU, NFLX, GOOG et al.) have been too subdued for the broad averages to blast off to new record highs. However, Apple's spectacular gap-up opening yesterday through a daunting midpoint Hidden Pivot resistance suggests the kind of leadership that could further fuel the impressive short-squeeze off last Wednesday's lows.  For my rally target in AAPL, as well as one in record territory for the E-Mini S&Ps, check out my touts for both.

Apple's gap yesterday through the 100.41 midpoint resistance (see inset) strongly implies that its D sibling at 105.64 will be reached. Although a pullback to the midpoint should be treated as a belated buying opportunity, I wouldn't suggest chasing the stock higher. That said, the four labeled peaks are tailor-made for the Hidden Pivot trader who can employ the 'camouflage' technique for getting long. If you understand why, you should go for it! _______ UPDATE (8:13 p.m.): The broad averages pulled Apple back down to earth yesterday when the stock tried to go opposite weakness that surfaced around mid-session. This runs flatly counter to my speculative idea that AAPL might pull the broad averages higher. That's still possible, since yesterday's 104.11 peak fell 53 cents of a rally target that remains valid in theory. However, we'll eschew speculation for now and simply watch to see whether  the 102.44 Hidden Pivot support holds (see inset, a new chart). _______ UPDATE (October 23, 1:59 p.m.): Apple has rebounded sharply today, off a 102.90 correction low to a so-far high of 105.05 that's 59 cents shy of our target. Most longs should have been exited by now. ______ UPDATE (October 27, 8:07 p.m.): Friday's high at 105.49 came within 0.15 of the target flagged above.  Bulls can continue to hold small long positions for a swing at the fences, but I'd suggest tying your shares to a stop-loss based on a downtrending impulse leg on the 15-minute chart. Currently, that would imply stopping yourself out if an uncorrected fall touches 104.52.  _______ UPDATE (October 28, 8:44 p.m.): Still long? Be alert at 107.08, a Hidden Pivot target that looks all but certain to be reached but which could stop the rally cold. You should tighten your trailing stop there in any case. ______