November 2014

The 2115.50 target identified here earlier is a logical minimum objective for now, but that doesn't necessarily mean it will be reached. In any event, we'll need to monitor the lesser charts for more finely-nuanced signs of continuing strength -- or perhaps incipient weakness. If the 2064.25 high endures overnight, look for any downtrend to find support at or near the red line, a midpoint Hidden Pivot at 2055.50. We shouldn't attempt to bottom-fish there aggressively, however, since it coincides with 'structural' support that will be on other traders' radar.  Ditto for the D target at 2046.75, although either -- especially the second -- could yield the kind of subtle abc reversal that we look for to initiate risk-averse entries. _______ UPDATE (10:23 p.m. EST): Night owls should check out the new chart, since I've sketched out a potentially tradable scenario. The bigger picture, detailed above, remains unchanged. _______ UPDATE (November 25, 9:41 p.m.): Zzzzzzzzzzzzz.

The Plunge Protection Team has been hard at work lately, although not in the way some traders might imagine. The very name evokes the shadowy activities of a group of Svengalis believed to control the stock market through timely interventions in such key trading vehicles as the S&P 500 futures. In fact, the PPT, more blandly known as the President’s Working Group on Financial Markets, was commissioned under President Reagan after the 1987 Crash to prevent meltdowns. These day, however, nearly six years into a ferocious bull market that seldom pauses for breath, one might question why a Plunge Protection Team is needed at all. The answer is that the PPT, far from defending against selling panics, has been furtively on the offensive, triggering short-squeeze panics that spike shares to new record highs at every opportunity. Usually, the news catalyzing these rallies hits the tickertape on a Friday, when the effects of a short-covering binge are apt to be most pronounced. It is hardly a stretch to imagine that these engineered events have been scheduled and coordinated by the PPT, working in concert with the central banks. Last Friday, for instance, U.S. stocks opened with a ballistic lurch higher on news that China, increasingly fearful of deflation, is about to ease. This had already sent stocks in Europe and Asia screaming overnight, setting up Wall Street’s by-now reflexive reaction. Recall that just five weeks earlier – on a Friday, as it happened – Japan announced its own, epic stimulus package – Max Keiser wryly called it QE9 – to the same effect: stock markets around the world soared. A presumably intended side-effect was that U.S. T-Bond prices spiked higher, briefly pushing yields down to lows that will linger in investors’ collective subconscious with a sedative effect against whatever fears they

The futures didn't get very far yesterday, but they at least went higher, and that is never a bad thing. All that's needed to start next week on the right foot would be a rally to the modest, 1232.00 target shown. Better yet would be a rally that exceeds it. It will take quite a bit more than that, however, to put bulls in that frenzied state of mind that will hit like gangbusters when they think they might be missing the boat. Shorts would feel an entirely different kind of anxiety, of course, but the combined effect would be the runaway bull market we've all been waiting for for all too long. Does a $200 breakaway gap await? I'm skeptical myself, but I'll continue to take positive signs one impulse leg at a time. In that regard, we should be encouraged by gold's ability so far to hold above the 1137.50 Hidden Pivot I'd first drum-rolled here a while back.

New record highs for the broad averages seemed all but a foregone conclusion at Thursday's close, so perhaps we should guard against the unexpected: weakness on a Friday! That would be very unexpected indeed, and it would probably take some earth-shattering news to bring it about.  Regardless, I've provided a Hidden Pivot rally target for the E-Mini S&Ps that can serve bulls and bears alike. We'll also be looking for a pop in Alibaba, having purchased a few expiring out-of-the-money calls before yesterday's close to keep ourselves interested in the week's finale.

Based on my chat room post late in Thursday's session, subscribers were able to stake out some small 'Jackpot Bets,' buying expiring calls at the 112 and 113 strikes for as little, respectively, as 0.21 and 0.15.  The latter options traded for as little as 0.10 yesterday before rocketing to 1.00 when Bahh-Bahh found traction after the opening and soared $5 in the space of an hour. It can, and often does, perform similar feats on a given day, and that's why I would rather be long a few out-of-the-money calls for cheap on expiration day than short them. The goal of these jackpot bets, which we ordinarily initiate on Friday mornings in the first hour, is to cash out half of the options in the early going for twice what we've paid for them, assuming the opportunity arises. If successful, that leaves us with a risk-free chance to make perhaps 5 to 10 times our money.  In practice, subscribers have done this or even better numerous times, and even when things did not go our way they were able to do no worse than break even. I've included a chart that suggests that, from a purely visual standpoint, a run-up to as high as 114.80 on Friday is hardly unlikely. We don't need that to happen to make a nice score, however, since even if BABA rallies just $1.50 or so in the early going, there will likely be an opportunity to 'double out' on half of our positions.  If the stock opens lower on Friday there could still be a chance to get a jackpot bet down. However, I'd suggest doing so with options of a lower strike purchased for perhaps 0.20 or less.  Don't bet more than you are comfortable losing, since this gambit is highly speculative.

With a week of tedious chop drawing to a close, the futures look torqued for another thrust, although not a full-blown wilding spree, at the bell on Thursday. Although they've yet to push past a 2055.25 target that I'd drum-rolled here a couple of weeks ago, the fact that they've been head-butting this Hidden Pivot since Tuesday without giving up much ground on pullbacks suggests buyers are raring to go. We shall see.  Easy progress above yesterday's high would indicate a push at least to the 2064.00 target shown. This would presumably be a downpayment on a more significant target at 2115.50 flagged here earlier.  Night owls will likely have the best chance to get aboard with relatively little risk, particularly if they look for their entry opportunities in the form of ABC rally patterns on charts of 15-minute degree or less.

GDXJ's ups and downs are in 'dueling' mode at the moment, alternating between bullish and bearish feints. It was mildly bullish when the stock slightly exceeded the 129.30 target shown on Tuesday. However, yesterday's slide also exceeded a Hidden Pivot target -- in this case a hidden support at 27.21.  Taken together, the action suggests that this vehicle will spend the next few days marking time in the range 28-29. The picture would brighten on a thrust exceeding 29.20 on Thursday, since that would imply more upside to at least 31.24. Alternatively, a continuation of the downtrend past 25.67 would have equally bearish implications. ______ UPDATE (November 24, 1:54 a.m. EST): GDXJ finally budged by moving above 29.28, albeit a day later than we might have preferred.  Now, if the rally holds above Friday's 28.42 low, a modest target at 30.43 will be in play -- would become an odds-on bet if and when this vehicle pushes decisively above the 29.43 midpoint resistance. _______ UPDATE (November 30, 10:57 p.m.): GDXJ was getting savaged Sunday night after Swiss voters rejected a measure that would have required the central bank to accumulate gold. The downtrend would become bearishly impulsive on the daily chart if it exceeds 23.86 (see inset, a new chart), but until such time as that happens, bulls deserve the benefit of the doubt.

Nothing lightens the permabear's heart like a juicy rally target that dares us to short it.  There's a major one coming up for the Dow Industrials, and the blue chip average could be there by week's end if the usual lunatics are out in force at Thursday's opening bell. Although we can't short the index itself, I've proffered a precisely comparable target for the Diamonds (DIA), along with instructions for buying puts at the appropriate time. If you're interested, check out this morning's tout for the DJIA.

It would take a mere 180-point rally to bring the Dow Industrial Average to the tantalizing, 17865 Hidden Pivot target shown. Odds will probably bend more favorably toward getting short there with a tight stop-loss than trying to get long for the ride up. However, I say that only because, permabear that I am, I am imagining the Indoos taking a very steep plunge without having achieved so obvious an objective. What I cannot imagine is buyers blowing past the target as though it were not there. Accordingly, traders looking to get short should use a corresponding target at 178.47 in DIA. Focus on out-of-the-money put options with 1-3 weeks left on them that can be bought for 0.60 or less. You should initiate this trade with DIA no more than 15 cents from the target, adjusting your bid so that it cuts the spread in half.  _______ UPDATE (November 21, 9:51 a.m. EST): DIA popped to 178.60 this morning, but I'm still waiting to hear from subscribers who bought puts before I establish a tracking position.