Going back to July, the Dow's current correction, now five days old, ranks as one of the biggies. I use that word facetiously, since in percentage terms the pullback at yesterday's lows amounted to a piddling one-and-a-half percent from the record high of 12167 recorded on October 26. As you can see in the chart below, the correction is about halfway to the oversold zone, stochastically speaking, so it could conceivably continue for another day or two. (Click on chart to enlarge) Someone in the Rick's Picks chat room asserted that the current doldrums would very shortly give way to a huge short-squeeze that has been building for a while. As evidence, he cited some interesting on-balance volume figures for IBM ' specifically, a positive OBV spike to two million shares on the close. 'Specs are betting on a drop,' he noted, 'but the commercials seem to be positioning for a rally. They are betrayed by the positive OBV.' Coincidentally, IBM is one of two stocks we've been using to position ourselves for a possible stock-market explosion. Our strategy is essentially a backspread that would automatically make us longer if stocks rise and shorter if they should fall. The tradeoff is that we assume premium risk on some close-in IBM call options as well as some January put options on another vehicle. You should visit the chat room tonight if you want the explicit details of this strategy, since they are spelled out in text dialogue that will remain accessible to all subscribers through tomorrow. Concerning Gold, we seem to have caught a beautiful entry point on a couple of stocks and have remained well on top of the rally since. December Gold's $11 thrust yesterday brought it within a stone's throw of our minimum target, but it is above
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