July 2010

So many speculators must have cursed themselves for not having lucked into $200 AAPL shares on the day of the flash crash that it looks like they aren't taking any chances this time.  Headlines blaring the iPhone boondoggle have actually pushed Lindsay Lohan (if not Mel Gibson) off our tabloid-obsessed nation's front pages, and yet the stock refuses to dive.   Trendline support comes in around 246.90 today, and if the stock continues to resist breaking down, Da Shakedown Artists may have to throw in the towel and pay up for it next week.

If the sea-bottom cameras show that all is placid at the well bore Friday morning, look for yesterday's recovery rally to continue, especially since bears showed such little conviction yesterday.  We'll be looking to short an E-Mini rally to 1108.25, provided it happens early enough in the session to give us some cushion before the final bell.

Two weeks of upward progress, if you could call it that, have failed to produce even a single new, bullish impulse leg on the hourly chart.  The futures therefore remain vulnerable to a fall to the trendline we've been monitoring, which comes in today at 17.375. Alternatively, it would take a thrust, merely, to 18.845 to send bears diving for cover. ______ UPDATE (1:16 p.m. EDT): Today's nasty spill actually projects lower than the trendline -- to 16.830. The midpoint support at 17.680 will offer bulls a last-ditch opportunity to turn things around, but if it's breached on a closing basis, brace for more downside to 16.830.

Considering how modest our rally target is, the futures are taking their sweet old time getting there.  We should use 1223.90 for now, based on the pattern shown in the accompanying chart.  Its sibling midpoint is 1213.20, but an intraday breach has not been sufficient to propel the futures the rest of the way. _______ UPDATE (12:17 p.m. EDT):  The futures have broken sharply lower this morning, presumably taking the path of least resistance. We now need to face the music --that the correction could continue down to as low as 1140.10 before strong hands start grabbing for bargains. (See new chart.  Here are the coordinates for the downtrend, from the 60-minute chart: A=1263.70 (June 28), B=1185.00, C=1218.80.)  The HP midpoint of this pattern is 1179.40, and so that will serve as our minimum downside objective for the near term. A close below it, however, would portend a full-blown retracement to 1140.10.  As Gold continues to fall, we should also monitor a lesser midpoint/D pairing (where A=1248.80, from June 30) of 1186.90/1155.00.  That midpoint has already been breached by $1.10, but we should stipulate a close below it before inferring the worst.

Bor-ing. We haven't got gotten much satisfaction hovering at 1108.25, waiting to lay out shorts at what had seemed to be an obvious an opportune place. The target remains valid, though, and we will find a way to use it if the futures ever get there. Check the chat room and this tout for intraday guidance if the target gets close.

Our assertion here yesterday that stock-market bulls have bought into an epic swindle elicited some spirited discussion in the Rick’s Picks forum.  We remain dumbfounded by the fact that there are otherwise intelligent people out there -- Fred Hapgood, old friend, are you listening? --  who think the economy will somehow extricate itself from the morass without our  suffering a period of misery equal in severity to the Great Depression. How could anyone believe that the Ponzi scheme being perpetrated by The Government is anything but a brazen deception worthy of Goebbels?  Here’s a post from “DG” that throws cold water on some of the fantasies and delusions that so far have helped keep The System nominally afloat: “Reading the comments in the forum yesterday, I was struck by the nonsense of a comment stating that there was no fraud. Seriously? The real estate boom was not fraudulent, when it is documented that there were fraudulent loans creating fraudulent buyers offering fraudulent prices? Doesn’t that indicate fraudulent price discovery? Isn’t the real estate collapse documenting this? (More than 7 million homes in some state of ‘off-the-market-yet-for-sale’ price discovery?)  The credit-crisis duct-tape repair job is not fraudulent when you take from taxpayers, to ‘kinda make whole,’ the same buyers who created the aforementioned fraud? “Does the bottomless pit of Fannie Mae seem a bit odd?  It seems like a house on fire, where they just keep coming with fresh wood from the mill to pile on and destroy more capital. Public pensions? How can someone who for 30 years contributes 8% of an average $50,000 income (for a $120,000 total) realistically expect to spend the following 30 years extracting $80,000 a year? These are better returns than Bernie Madoff offered. (Don’t tweak me on my numbers – they are close enough, and many are

The Dollar Index is getting very close to a potential swing low, but there is little else of interest pertaining to the vehicles we follow diligently, including Gold and the E-Mini S&Ps. I've flagged a Hidden Pivot support in the latter that could work for night owls, but it's worth only a very tight stop-loss.

If we ignore yesterday's gratuitous hiccup, Silver looks poised for a more durable thrust, having exceeded the Hidden Pivot rally target shown in the chart by more than four cents yesterday.  However, the futures weren't providing any solid hand holds Wednesday night, even on the 2-minute chart. A midpoint resistance at 18.395 might work as a breakout number, but you'll need to improvise your own tactic if you want to get long.

DXY fell yesterday to within 0.41 points of our target, a Hidden Pivot at 82.80 that has the potential to produce a very tradable swing low.  There are many ways to play the turn if it comes, and so I am proffering the target for your discretionary use. If DXY thrusts above 83.77 before touching 82.80, it would imply a strong (but possibly brief) rally immediately ahead. ______ UPDATE (12:22 a.m. EDT): DXY's obliviousness to the hidden support suggests yet more weeks, or longer, of weakness ahead.  The next test will be of a minor support at 82.16, so let's see how it goes.