Thursday, June 9, 2011

Bears held a slight advantage at the close, but that would be easily remedied by a pop above the 1547.40 peak-let shown in the chart.  Failing that, we should expect a relapse down to 1527.20, a Hidden Pivot target that can be bottom-fished with a 1527.40 bid, stop 1526.90.

From a chartist's perspective, nothing could be less significant to a stock or commodity's price action than news, so we should treat yesterday's OPEC story as absolutely meaningless. It seems they could not agree on an output boost that savvy traders supposedly had discounted. The news media made much of this, but all we see in the charts is yet another distributive rally in a bearish pattern that will eventually take the July contract down to 85.07.  We can infer that the move has begun in earnest if and when the futures close for two consecutive days below the 95.11 midpoint associated with the target.

Pushed below 75, the Dollar Index has grown increasingly nasty toward bears, with Whoopee Cushion rallies interrupting the decline each step of the way.  Although I am still calling for a major decline to at least 68.36, it's not going to be an easy ride for shorts, since the lower the dollar goes, the closer the world's financial system moves toward the inevitable Day of Reckoning. Fortunately, and in any case, it will be virtually impossible for this vehicle to take us by surprise if we simply watch for the creation of a bullish impulse leg on the hourly chart that would warn of a significant trend change.

By breaking beneath a key low recorded on April 18, the major averages have generated bearish impulse legs on their respective daily charts. This is shown in the chart accompanying today's QQQ tout, and it is one reason that we bailed out of a long position in that vehicle when it went against us only slightly.  Downside targets in other vehicles, including the E-Mini S&Ps, had been more than a month in coming, and their failure to engender strong bounces  is a second sign that trouble is brewing.

We briefly held July 57 calls but ditched them for a tiny loss when the Cubes slightly exceeded the downside Hidden Pivot we'd used to time our entry. The move through the support has been slight so far, but the fact that it was exceeded at all hints of still lower prices to come.  Moreover, the decline created the first bearish impulse leg on the daily chart since March. This means we should look to short this vehicle on rallies, so stay tuned for detailed advice if and when an attractive opportunity surfaces.     Incidentally, if you don’t subscribe to Rick’s Picks but would like to know more about the proprietary camouflage trading technique that we use to keep entry risk to a bare minimum, click here for information about the Hidden Pivot Webinar in late June.  You could also take a free week’s trial subscription that will give you access not only to explicit, easy-to-follow trading recommendations each day, but to a 24/7 chat room that draws combat-hardened traders from around the world

We usually look for rally targets to get short; yesterday, however, with the futures down nearly 100 points from early May's Mother of All Bear Rallies peak, we tried bottom-fishing -- with inconclusive results. The E-Minis fell almost precisely to the target I'd billboarded last week, but they couldn't get airborne.  Moreover, because the target had been five weeks in coming, we had good reason to expect a substantial bounce. That could still happen, but the fact that it did not happen yesterday on first contact with the target is ostensibly bearish. To be more certain of this, we'll set the bar today at  1288.00, a tick above the peak shown in the chart.  A print at that price would turn the hourly chart bullish for the first time in two weeks, setting up a possible camouflage trade. Otherwise, look for the futures to continue lower -- to at least 1269.75, a Hidden Pivot support hat can be bottom-fished with a stop-loss as tight as 1.00 point.  Its provenance is shown in the chart.

There were some near-bullseyes in the day’s touts, and so we looked closely at the patterns that had produced them: in the E-Mini S&P, Gold and Silver. A prediction earlier in the week of more tedium was holding, and although bullion futures were having their tradable ups and downs, there was little net movement to suggest a trend. We also found reason for extreme caution if Comex Gold should spike to a marginal new record high, since, for reasons of a long-term Hidden Pivot target, it has the potential to be the Mother of All Bull Traps.

[My wife, Marilyn Ackerman, has been raptly absorbed for more than a year in the works of such laissez-faire economists as Smith, Hayek, Mises, Hazlitt and Sowell. She is presently immersed in Rothbard, whose thousand-page tome, Man, Economy and State, she brought with her to my college reunion in Charlottesville last weekend. The blogging side of this quest for knowledge has put her into close contact with college students whose burgeoning interest in libertarian ideas represents a bright spot in the U.S. political scene. Below is her report from the field. RA]. The weekend commentary by Wayne Razzi,  What Are You Going To Do? generated many dismal and depressing posts. It reminded me that neither Wayne nor his tormentors  know what I know, namely that there is currently a rapidly growing movement of young Americans -- on college campuses, no less -- who understand the importance of preserving our liberties and combating tyranny. So, while it may seem to some jaded Rick’s Picks readers that there is nothing we can do about the ebbing away of basic freedoms, there is a whole new generation of liberty-minded young Americans who are not ready concede defeat.  To the contrary, these kids mean business – and they have the smarts and the drive to take on the challenge. One group at the forefront of this movement is Young Americans for Liberty. The group was founded to support Ron Paul’s presidential run in 2008 but has evolved into a fast-growing campus-based entity that gives a home to students who are uncomfortable with the liberal/progressive tone that dominates the academy in most locales. At Colorado State University alone, the figures on participation rose from a piddling three attendees at the first meeting in 2009 to an audience of more than 400 at an appearance by