November 2011

Apple's most recent feint lower missed our 362.22 target by a little more than a buck, suggesting this reversal could be tradable.  If so, we should look for a 'camo' entry opportunity at 381.44, the conventional 'x' entry point of the rally pattern; or near 399.55, its Hidden Pivot midpoint. The target we'd be shooting for would be 435.78, and the preferred way of leveraging it would be by way of an option butterfly spread.  I've set a screen alert, so stay tuned for further  details.

Achieving a modest rally target at 32.775 is proving to be quite a task, although a newly feisty gold appeared to be tugging this vehicle higher early Tuesday evening.  The midpoint resistance associated with 32.775 lies at 32.110, and so any slight progress above it would have tradable implications for the near term.  Ideal camouflage would come from a stab higher that creates a minor 'B' peak between 32.150 and 32.285.  For your guidance, I have sketched this out hypothetically in the chart. _______ UPDATE (10:27 a.m. EST):  The rally was too quick and strong to catch via camouflage, gapping through a hypothetical entry point at 31.445 that triggered around 8:05 a.m.  The camo pattern went on to exceed its target by a country mile, creating a larger pattern with a target, unachieved at this moment, of 32.990. The action remains bullish because the larger pattern has exceeded its 32.440 Hidden Pivot midpoint. The futures are oscillating around this number at the moment and are therefore a 'camo' buy.

The futures were stymied yesterday trying to reach a somewhat ambitious rally target at 1746.80 (see inset).  The 1725.40 midpoint has yet to be touched, but if and when the futures push above it, the implied $21 follow-through would become an odds-on bet. _______ UPDATE (Moments later): The futures have popped $4, to $1726, in a blink.  Camouflageurs should look for a point 'B' high that falls between 1734.10 and 1738.50 to leverage a low-risk entry, although there are some lower "external" peaks to work with as of this moment, 7:28 p.m. EST. _______ FURTHER UPDATE (10:18 a.m. EST): We initiated a four-contact long position around 8:35 a.m. EST, using a 1735.70 entry trigger.  The bullish ABC pattern was 'camo' perfection, with three single-bar coordinates and a point 'B' high that fell in the middle of the topping range I'd given.  Half the position was exited at its 'p' midpoint, 1741.80, leaving us with two contracts and a paper-profit-adjusted cost basis of 1729.60.  We'll plan on taking profits on an additional 25% of the position if and when the 'camo' pattern's 'D' target at 1754.00 is reached.  Use a 1729.50 fixed stop for now. Note: Using camouflage on the 5-minute chart, it would have been possible to get in as low as 1715.00, with an 8:05 a.m. entry and a 1726.70 minor-D target.  _______ POSITION CHANGE (2:21 P.M. EST):  The December contract has gone dead, so I'll recommend rolling into the February (GCG12) contract at a current price of around 1751.00.  Use a 1758.00 target to exit the third of four contracts initially bought.  The two contracts we are long have an effective cost basis of 1733.00 after imputing to them the paper profit on the two contracts already exited. If we cash out the third, it will leave us

There's little I can offer you today, since the futures spent most of yesterday correcting the weakest impulse leg I've seen since the last groin pull on Dancing With the Stars. In theory, the next pop higher would be to 1208.25, predicated on a breach of the Hidden Pivot's 1198.50 midpoint. In practice, you'll have to trade this one catch-as-catch-can using the pattern shown, unlikely as it is to hold. _______ UPDATE (10:34 a.m. EST):  With the Fed's commitment overnight to become the lender of last resort to the Western World, the futures have blasted into hyperdrive. The monster rally, amounting to about 410 Dow points so far, is at this moment inching toward a Hidden Pivot target at 1239.75 that could cap today's action.

Because securities markets sometimes do crazy things for stretches of days, weeks or even months, Rick’s Picks seldom attempts to reconcile seemingly contradictory forecasts for trading vehicles that are related, such as crude oil and gold (more on these two in a moment).  Nor do we seek to explain the ups and downs of stocks, bonds and commodities by connecting their frequently nutty behavior to events in the even nuttier world.  That futile task we leave to The New York Times, The Wall Street Journal and their ilk, since they are in the business of selling news as something that matters greatly, particularly to investors. It is with the foregoing in mind that we came to contemplate a seeming fork in the road for crude oil and gold. On the charts, the former looks like it’s about to blast off, while the latter seems bent on screwing the pooch for the remainder of 2011. We said as much in the headline that topped yesterday’s commentary:  Doomed Rally in Stocks Could Cap Gold’s Surge. Doomed may have been too strong a word – we did write a column for a Hearst paper for a few years, remember – but bulls could hardly have been encouraged by the egg the broad averages laid yesterday after having rallied nearly 300 points the day before. A few denizens of the Rick’s Picks forum (click here for a free seven-day pass that will also give you access to our detailed daily forecasts and trading recommendations) thought that stocks were simply taking a rest, but we saw them as relapsing into the quagmire of global problems. The most bullish story out there at the moment – bullish, that is, for everything but the U.S. dollar and Treasury paper – is that Helicopter Ben is about to

Two bearish patterns that have been weighing on this vehicle are so clear that lower prices seem likely. My worst case target is 2.305, well beneath the so-far multiyear low at 3.470 that was recorded a week ago and 35% below current levels. It is the 'D' Hidden Pivot target of the pattern shown, and with a sibling midpoint at 3.790, a rally to that number should be viewed as a shorting opportunity, provided "camouflage" is used. If a dead-cat bounce should exceed the midpoint, however, the next would be at 4.422, my maximum upside projection for any bear rally and a potential back-up-the-truck number for shorts.  Note:  I will switch to coverage of the January contract henceforth, but please use 2.210 as its bear-market target.  That number is equivalent to the March target at 2.305 and has 3.783 as a midpoint sibling.

Because the camouflage technique has proven so effective in minimizing entry risk, I have much favored it over conventional trades -- i.e., "old-style" against-the-trend Rick's Picks recommendations using micro-tight stops.  However, because we've got "house money" to play with as a result of yesterday's felicitous trade in December Gold, I am recommending that you risk some of it on a promising play in December Silver (see tout).  If you know how to "camo" your way aboard, however, by all means do so and let me know in the chat room whether you've been filled so that I can provide tracking guidance.

Use the 31.755 target of the pattern shown to buy four contracts with a three-tick stop-loss. If the order fills and survives till morning, I will post further guidance. However, you should take half the position off if it goes in the black by nine ticks (i.e., 4.5 cents), and stop yourself out of the rest if a downtrend generates a bearish impulse leg on the three-minute chart. _____ UPDATE (2:09 p.m. EST): Around 1 a.m., the futures did indeed take a tradable, 5-cent bounce from 31.750, implying that you would have bought as advised and taken profits on half the position on the brief rally that followed, only to see the futures dive to lower lows, stopping you out, overnight. Officially, I'll score the trade as a scratch.

We took the money and ran yesterday, exiting the last piece of a long position at 1709.00 on a stop-loss. The position was held overnight and produced a theoretical gain of $2200 for each initial four-lot acquired.  I have mixed feelings about bailing out, since one of these little rallies that we've boarded is going to be the one that launches the futures toward the 1977.70 target shown in the chart.  The 1756.40 p sibling of that number has already been smashed, and that is bullish, but our immediate enthusiasm should be tempered by the failure of last month's rally to push above any of September's peaks.