February 2011

The 1356.00 target we've been using for this vehicle is close enough to the 136.25 target (136.05 if you use the one-off point 'A') flagged in SPY to command our urgent attention.  While the odds of picking the exact top of the Mother of All Bear Rallies are never going to be great, the way these targets are lining up makes this one of the more interesting possibilities we've seen since the rally began in March 2009.  Since a 1356.00 target has been mentioned by some other technicians, according to our friend Doug B, we should  start looking to get short via camouflage anywhere above 1345.00 or so.

The two patterns shown in the chart yield precisely the same target, 136.25, so we'll plan on shorting there if and when it is reached. Specifically, I'll recommend buying four March 136 puts, which would be well priced at around 2.05-2.15. Since this looks like a high-odds spot for a reversal, and because it could be precipitous and opportune, we'll be on high alert for any downturn occurring from somewhere beneath the actual target. Anything above 134.00 would be in potential camouflage territory.  I am grateful to an alert Pivoteer, Steve Frewin, for spotting these coincident patterns. I might have overlooked them had it not been for his query. _______ UPDATE (February 23):  We'll put the target aside for now, since SPY has generated a bearish impulse leg of daily-chart degree.

[Our correspondent and occasional guest essayist Erich Simon has been talking up gold for as long as he can remember. Recently, however, after working some comparison numbers based on grocery bills we would have paid 40 years ago, he discovered that gold’s powerful rise was somewhat anemic before Helicopter Ben opened the money jets. He further notes that our apparent overestimation of gold’s strength is no accident – that even the most astute bullion investors have been fooled by our cunning masters.  For the full story, read his essay below. RA] The dollar is down about 98% since it became global tender. Back in 1971, era of Nixon Shock, the price of an ounce of gold was $35 -- in line with its 1945 conscription. Right after Nixon closed the gold window, the price peaked at $42. All things being equal (and assuming gold doesn't get used up), at what price must gold be valued to compensate for a 98% loss from -- call it inflation, debt or whatever you like. I think the math goes like this: One dollar is now 2% of its former self. If you divide the 1971 “fair market” price of $42 by .02, you arrive at $2,100. The price of gold (POG) is in fact now around $1,365. The $2,100 level is probably more accurate than the $2,500 prediction I made years ago, when I was appalled at the large number of billionaires being hatched from the shells of millionaires. But the higher estimate can stand nonetheless, since we could easily see, from current levels, the equivalent of the 1980 spike to $850. The catalyst might be the postponed bank-runs that are baked into the cake. Mass denial would end in a flash as Americans rushed to exchange paper savings for necessities and other

We blew out an 800-share position yesterday that we'd held for quite some time. The sale price of 34.16 yielded a theoretical gain of $15038, based on an adjusted acquisition cost of 15.35.  My goal is to re-board the stock when it looks opportune, establishing a new long-term position that all subscribers can hold. It's possible this will occur at a higher level, but my main objective is to establish the new position when risk appears low.

No change.  A toothsome target at 1379.80 remains my minimum upside objective for the near term. It is a bullish sign that most of the price action over the last several days has occurred above the 1362.00 midpoint pivot associated with the target.

A prior peak at 30.885 is still the benchmark to beat if bulls are going to rattle the bad guys next week.  The task shouldn't be too difficult, since the futures have plenty of wind in their sails from numerous minor, bullish patterns. One that I especially like projects to 31.02, and although it's about as obscure as they come,  it has two things going for it: 1) the k-A segment and B-C look like they could be siblings, at least in hillbilly country; and 2) price action during the last few days has centered on the 30.14 midpoint associated with the target.  If the week ends with the futures settled above that number, my hunch is that things will go smoothly for bulls in the days ahead.

The pattern shown in the chart is as phony as a zircon, since its point 'B' failed to surpass any external peaks, and also because the initial thrust from 'A' has so far produced no fewer than three tentative 'C's.  We'll put all of that aside, however, to project a minimum 88.40 on the next thrust, since the futures look oh-so-eager to ascend. If the target is reached, that would refresh the bull trend by surpassing the external-ish peak at 88.11 recorded on Tuesday.

In today's E-Mini S&P tout, I've alluded to a possible perfect buying opportunity for night owls and camouflageurs.  The chart is reproduced alongside, and I'll leave it to you to discover its one flaw.  However, the problem is not serious enough to put me off the trade if the opportunity should arise as shown, however, everything else about the pattern is quite pleasing to the eye.   Please note that fresh touts for gold and silver will be out later tonight.

Old timers might remember a day when such carnage as we witnessed yesterday in Cisco might have caused more than the piddling drop that occurred in the Dow and Nasdaq indexes.  Assuming that that's as bad as things are going to get for now, we'll look for the E-Minis to go bounding higher today, drawn magnetically toward our 1356.00 target as Icarus toward the sun.  The futures never even made it down to a 1313.25 midpoint support where, during an impromptu online session yesterday, we had determined to get long with a three-tick stop-loss.  A bullish impulse leg created on the 30-minute chart toward the end of the session was squandered when a lesser, bearish one ensued, leaving night owls and camouflageurs to discover what they will.  The chart accompanying comments under 'Today's Action' shows what a near-perfect buying opportunity might look like. My short-term bias as of around 7:30 p.m. EST was very slightly bullish, but a print at 1320.25 would turbocharge it. _______ UPDATE (10:14 a.m. EST ):  It took all night for a camouflage trade to develop, but if you want to see what  pportunity looks like, check out the A-B impulse leg that finally signaled the turn. On the 30-minute chart, A=1310.00 at 5:30 a.m. EST; and B=1315.75 at 9 a.m.  All three coordinates are single-bar, and they indicated a 1314.75 buy-stop entry a little more than 30 minutes into today's session.