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Commentary for the Week of February 22

Greece? Investors Couldn’t Care Less

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In these all-too-interesting times, the headline I found most disturbing last week, from The Wall Street Journal, was this one:  ‘Greek Troubles Cause Barely a Ripple’. This was not mere hubris but arguably something worse, since investors have aggressively been putting their money where their mouths are. A salient result, the Journal reported with no hint of alarm, is that “the bonds of other weak European countries have hardly ever been stronger.” Indeed, this is how very desperate capital has become in search of decent returns.  But then, why would investors stop lending Other People’s Money to basket cases like Greece, Portugal and Spain as long as Germany, the only European country with real skin in the game, isn’t threatening to ring down the curtain? [click to continue…]

Thought for Today

Some Perspective for Friday and the Week Ahead

The stock market’s state of agitation stretched into another day, with the broad averages unable to sustain loft on either of two rally attempts. Bears didn’t have much success either, although the feeling grows that they will soon have their day if stocks don’t demonstrate some pluck. Apple remains the wild card, although yesterday’s $2 gain at the peak was disappointing when measured against the $7 decline earlier in the week. We’ll look for jackpot plays in the chat room Friday morning before the opening, and my gut feeling is that the opportunity will come, if it does, from shorting into feeble head-fakes in the first 30 minutes of the session.

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Touts

$GCJ15 – April Gold (Last:1209.90)

Don't let gold's weaknessThe correction from January’s 1308.80 high has been nasty, but we shouldn’t let that distract us from seeing the turn if it comes.  It’s tempting to think yet another leg down is coming over the next day or two and that we should therefore be looking for a way to get short. Notice, however, that the larger, bullish ABC pattern going back to the January 2 low is still intact. That pattern would generate a buy signal on a print at 1225.80 (rounded).  Accordingly, I’ll recommend using a ‘camouflage’ entry signal on the 3-minute chart or less to get long once that number has been hit. This is liable to be tricky, so don’t hesitate to seek guidance in the chat room.

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$USM15 – June T-Bonds (Last:161^22)

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AAPL – Apple Computer (Last:130.41)

Listen for the Fat LadyThe broad averages  resisted the downward tug of AAPL yesterday, but don’t expect them to go their separate ways for long, or by much. The world’s most valuable stock closed off $3.53 yesterday at 128.64, while the Dow Industrials settled up 15.38 points. Which will win this tug-of-war? It depends on Apple, a global bellwether whose significance cannot be overestimated. If the stock smashes the 127.92 Hidden Pivot support (see inset) on Thursday and falls another $2 to $3, I’d expect the Dow to be down at least 100 points. Alternatively, if AAPL finds traction near Wednesday’s lows, that would lend buoyancy to a stock market that looked like it was eager to move higher yesterday.

Regardless, the very long-term rally target at 143.97 shown in the chart will remain theoretically valid even if the stock were to fall to $100 or lower.  I’m not expecting anything remotely that bad at the moment, since it would be tantamount to sounding taps for a bull market that is about to enter its seventh year. However, a correction over the near term to the red line, a midpoint pivot at 116.92, would not be unusual or cause for alarm. _______ UPDATE (10:12 p.m. EST): The stock should bounce from a midpoint Hidden Pivot support at 128.55 (30-minute, a=131.26 on 2/25) if bulls are going to carry the day. The support will remain viable as long as 130.87 has not been exceeded overnight.

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$+DIA – Dow Industrials ETF (Last:181.91)

DIA calendar spreads have doubledTwo weeks ago, with DIA trading around 177, subscribers acting on my instructions bought 16 March 27/Feb 27 185 calendar spreads for 0.48. The rally since has nearly doubled the value of the spread, and so I’ve advised selling ten of them so that you still hold six spreads, effectively for no cost. Now, bid 0.01 to cover the short Feb 27 calls. If successful, we’ll hold six ‘free’ March 27 185 calls for a swing at the fence.  If you are able to buy back the calls, offer six March 27 187 calls short for 2.00, good till further notice.

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$DXY – NYBOT Dollar Index (Last:95.19)

When dollar bull resumesIt’s no coincidence that the stock market’s steep rise in February began just days after an equally steep rise in the dollar stalled in late January.  The dollar has been moving sideways ever since, extending a monotonous sine-wave correction that is setting up the dollar’s next powerful rally. It projects to at least 96.30, a relatively modest move of about 2% that would leave DXY a tad shy of  a small but technically important peak at 99.25 recorded in August of 2003 (see inset). The dollar has already blown past a more significant ‘external’ peak at 99.25 from 2005, so it’s got nothing to prove. But if the next upthrust eventually exceeds the 96.30 target as I expect, it would add a robust new dimension to the bull market begun in earnest last year.  It would also put considerable pressure on U.S. stocks, perhaps even ending February’s joy-ride on Wall Street. _______ UPDATE (February 26, 10:15 p.m. EST): Yesterday’s sharp rally generated a bullish impulse leg on the daily chart. If this is the breakout we’ve been waiting for, a run-up to 96.58 is imminent. If DXY needs more time to  consolidate, look for oscillations around a midpoint pivot at 94.92 in the day ahead (daily chart, A= 92.15 on 1/21).

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+SNIPF – Snipp Interactive (Last:0.77)

If bulls are going to take a restSnipp Interactive [SNIPF: OTC] remains my favorite stock pick for 2015. Subscribers who bought the Canadian-listed shares (SPN:CN) when I first recommended them last January could have gotten aboard for as little as 10 cents. They’ve since traded as high as 0.82. I bought SNIPF myself after sitting in on a conference call a little more than a year ago with its CEO, Atul Sabharwal. I was impressed with his pitch but am even more impressed now that I’ve seen how very innovative and imaginative the company is. They continue to win new business with a growing list of blue chip clients, often by inventing appealing new ways for the clients to engage customers. The latest such offering features an “augmented reality” campaign designed for Honda’s exclusive licensee in Kuwait, Alghanim Motors. Click here to read more about this.

Some of Snipp’s clients are understandably skittish about revealing the marketing tactics the company has developed for them. Under the circumstances, Snipp’s business successes sometimes go untrumpeted or even unremarked. Take a look at Snipp’s home page, though, and you’ll see that the young company is gaining traction with a very impressive list of clients. What I like most about the firm, however, is that it makes money in ways that any investor can understand. Here’s how they describe themselves on their web site: ‘Snipp builds shopper marketing and promotions solutions for brands, agencies and marketers. We have a comprehensive suite of solutions including receipt processing, loyalty, rebates, mobile promotions and contests, mobile messaging, rewards and more.’  In the digital age, every investor should own at least one tech stock whose business methods and revenue model are as transparent as Snipp’s. From the client’s standpoint, the results Snipp achieves with mobile-phone-based marketing not only demonstrate the power of such promotions, they do so in real time. That is one of Snipp’s strongest selling points, as well as a perfect formula for winning repeat business.

Those who already own the stock would not have failed to notice that a “bought sale” underwritten by Canaccord and completed just days ago will significantly dilute shareholder equity. The deal originally sought to raise $8M, but the amount was increased to $12M ( @ 0.55 CDN per share) to accommodate unexpectedly strong demand. The sale appears to have slowed SNIPF’s steep rise on the charts (see inset), but my gut feeling is that this will be temporary and that the ultimate impact will be highly beneficial to shareholders. Give a lean, aggressive upstart and innovator like Snipp $12 million to grow, and they will do so — as efficiently as any investor could hope for. _______ UPDATE (February 17, 5:25 p.m. EST): The stock took a powerful leap today on Canadian volume of 2.1 million shares — most impressive. The percentage gain was 13.41% CDN, or 18% in U.S. dollars. From a technical standpoint, the OTC stock is due to meet daunting Hidden Pivot resistance at exactly 0.8065, equivalent to around 0.98 CDN (see inset, a fresh chart). I expect a sharp pullback from that price, but if SNIPF simply blows past it, that would imply there are still plenty of investors eager to jump aboard, even at these nosebleed heights. _______ UPDATE (February 18, 5:05 p.m.): The stock popped once again after taking a modest hit in the early going. The high on Canada’s Venture Exchange was 0.99, and although the O-T-C price in the U.S. seems to have remained at 0.77, the 0.8065 target should be considered filled. Now let’s see whether the target, clear and compelling as it is, marks at least a temporary top.

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$KSS – Kohl’s Inc. (Last:69.62)

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$CLH15 – March Crude (Last:51.07)

Even if this is just a dead-cat bounce in crudeThe futures reversed yesterday from a low that was 26 cents shy of a 47.10 midpoint pivot where we might have expected the turn. The failure to reach a correction target is incipiently bullish, but how high can this suspected dead-cat bounce go? A logical answer is to 58.45.  That’s the midpoint Hidden Pivot of the long-term bear-market pattern shown, and a corrective rally that returns to it would hardly be unusual. We often count on it, not only to forecast price swings accurately, but to trade them profitably. Typically, we try to get short at the top of rallies like this one — retracements to midpoint pivots (shown here as a red line). We will in fact attempt to do so aggressively if the opportunity should arise, but in the meantime we’ll trade with a bullish bias, even if we strongly suspect that the rally is no more than reflex bounce that is doomed to fail. A move up to the red line may not look like much in the context of the long-term chart, but it would in fact represent a 34% gain relative to the recent low at 43.58. _______UPDATE (February 26, 10:20 p.m.): Zzzzzzzzz.

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$+JNK – High-Yield Bond ETF (Last:39.74)

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$HGH15 – March Copper (Last:2.5840)

Copper’s chart looks almost as ugly as crude’s — no surprise, since both reflect the state of the global economy far better than nutty GDP figures that seem to capture mainly the health of the U.S. car-leasing business.  Notice that March Copper has bounced from a recent low somewhat above a clear Hidden Pivot target at 2.3635. My hunch is that the eventual low will occur even closer to the target, but that the futures are due for a bounce in any event. (This number corresponds to a projected low of 43.58 in March Crude.) If the support fails, however, you should infer that Copper will fall to 2.1665 before it turns around. That, too, is a Hidden Pivot target, and it can be bottom-fished aggressively with as tight a stop-loss as you can abide. _______ UPDATE (Feb 2, 10:17 p.m.): Copper has gotten tugged higher by the rally in crude oil, with the result that this vehicle now looks bound for at least 2.5555. Anything above that Hidden Pivot would be telegraphing more strength. _______ UPDATE (Feb 3, 11:03 p.m.): This short squeeze will reach a new threshold of viciousness if it exceeds the ‘look-to-the-left’ external peak recorded on January 13 at 2.6590. Based on Hidden Pivot Analysis, I’m looking for at least 2.6435 over the very near term. _______ UPDATE (Feb 5, 11:20 p.m.): Doc Copper now looks poised for a run-up over the near term to 2.6675, a Hidden Pivot resistance of middling importance. _______ UPDATE (Feb 10, 8:18 p.m.): Oh well, Doc Copper has aborted the move. I’m going to archive this tout lest we become bored with it. FWIW, at Wednesday’s close, the downtrend pointed to a minor Hidden Pivot support at 2.5208, or 2.5010 if any lower. _______ UPDATE (Feb 12, 11:50 a.m. EST): Someone queried me in the chat room about Copper, so I’ve pulled it out of the archive with this updated outlook. Tuesday’s 2.5255 low slightly changed the rally target, to 2.6595. This will work, and precisely, because of the very precise pullback we saw this morning from p=2.5925. On the hourly chart, here are the coordinates: a=2.4845 on 2/11; b=2.6185 on 2/3. Please note that a lesser Hidden Pivot at 2.6265 is likely to show some stopping power on the way up. _______  UPDATE (Feb 13, 8:34 a.m.): Not quite as precise as I’d expected. The futures missed the target by 0.0045 points on the first try, then overshot it by 1.6  cents 12 hours later. If they continue their ascent, the next stop would be 2.6675. My highest target for the next 2-4 days is 2.7320, and I recommend shorting there aggressively if you are long when the futures get there. ______ UPDATE (February 17): I have taken Copper off the list for now because it has become a big bore. Please inquire in the chat room if you are still onboard for the Chinese water torture. ______ UPDATE (Feb 26, 9:17 a.m.): Boring or not, Copper has surged this morning to within 0.0005 points of the target I disseminated when it was trading 15 cents lower. Please let me know in the chat room if you traded the target.  _______ UPDATE (February 26, 10:23 p.m.): Several subscribers reporting exiting profitable long positions — one from 2.40! — at or near the target. Nice shootin’!

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