Friday, April 20, 2012

If the dam breaks, putting an end to this potential cinder block's oh-so-coy behavior during the last two weeks, we'd be looking at a fall to 1324.75 in a trice. (How refreshing would that be?)  The p midpoint support lies at 1357.25, and that's where camouflageurs should look for a tradable pattern to develop on charts of  5-minute degree or less. If two or more traders report a fill in the chat room, I'll establish a tracking position for your further guidance.  Hey, why not be a trader instead of a lurker! Click here.

Gold made a gratuitous new point 'C' low yesterday in the throes of a week of nearly unendurable tedium. However, this didn't diminish the potential usefulness of a by-now-well-promoted trendline that will come in today anywhere between 1671.90 and 1670.60, depending on the time of day. As before, camouflageurs can try to get long in advance of a breakout by looking for a bullishly impulsive thrust on the hourly chart.  A previous peak at 1660.40 remains the trigger price for bulls to regain the offensive.

Silver Wheaton may yield an opportune buy this morning, according to an analysis of the stock done in conjunction with last night's concluding session of the Hidden Pivot Seminar.  Accordingly, I'll recommend  bidding 29.33 for 400 shares, stop  29.18. Our bid lies two cents above the midpoint Hidden Pivot of the pattern shown. This play is obviously highly speculative, since it is usually wise, when trying to catch a falling piano, to let it first bounce three times. If the stop fails, try again at the 'D' target, 27.97, using a 27.99 bid, stop 27.89. My hunch is that there are more than a few Rick's Picks subscribers who have been itching to try again. We already hold a bull spread (two June 40-42 verticals) whose cost basis has effectively been reduced to zero by partial profit taking during a fleeting rally a while back.  Note: There is one more target at 28.15 where you could try buying, but this should be done only by those who understand why. Hint:  Start with A=34.20 on 4/2, hourly chart. _______ UPDATE: The target at 29.33 caught Silver Wheaton's intraday low to the penny, although so far the stock has gotten no bounce from it whatsoever. Maintain stops on our newly acquired position at 29.18, but make it one-cancels-the-other with a closing offer of 200 shares @ 29.97, day order.  The wind in precious metals will need to change direction Sunday evening to lift this stock out of trouble. If it falls anew, 27.97 would be the next spot where we can try to get long. _______ UPDATE (11:54 a.m. EDT):  Silver Wheaton has gotten pulverized this morning. The good news is that the low of the $1.38 plunge was 27.96, a single penny beneath where I'd suggested buying.  For your further guidance,

A question concerning Wheat futures during last night's Hidden Pivot Webinar led to the interesting discovery that the December contract had just bounced from a bear market target nearly a year in coming.  The pattern shown, a slow-motion train wreck, used a $9.77/bushel high 11 months ago to project a final low at 647.25.  Two days ago, a low at exactly that price occurred, giving way to a so-far bounce of 23 cents that would have produced a theoretical profit of $1150 per contract. The implication is that a major bottom is in, although if the futures were to relapse beneath so important a Hidden Pivot support relatively soon -- say, within three weeks or less -- it would imply that powerful selling remains to be spent. The next place we might look for the December contract to find traction would be at 624.25, but in  the meantime, traders should look to get long via camouflage using the 60-minute chart for targeting. As of around 1:40 a.m. Friday EDT, there was just such a pattern developing with an implied entry price at 669.88 and a target at 676.50 (a=653.25 at 2:15 p.m. on 4/18; b=666.50 at 7:00 a.m. on 4/19). _______ UPDATE (May 7, 12:01 p.m. EDT):  On the 30-minute chart, the 620.00 'D' target of a nicely defined downtrend can be bottom-fished with a very tight stop-loss.  The coordinates are: A=717.00 on 3/30; B=647.25 on 4/18, and C=689.75 on 4/18. _______FURTHER UPDATE (May 18, 2:30 a.m.):  Wheat has trampolined off a 629 low, a dime from our target, so we'll put this tout aside.

In line with today's note concerning using Apple as a bear market bellwether, I am going to start tracking the stock more diligently than before.  My hunch is that if Apple's recent high was a blowoff, then a bear market for the broad averages has begun. If, on the other hand, Apple achieves new highs, it will pull everything else along with it, buttressing institutional mindset by providing a dependable source of portfolio profits. If I were an oddsmaker, I'd lay 3-to-2 that new highs are coming.  It's mainly a case of the recent price break being too obvious, and of this week's partial recovery being too steep. Jesse Livermore might be short here, as charts that I received the other day from a subscriber intended to suggest, but I'd like to see a couple more corroborating signs before I dive in myself. On the other hand, we may have seen Apple's "Babson's Break".  From a technical standpoint, there is no doubting the power of last week's impulsively bearish thrust. On the 180-minute chart shown, it exceeded no fewer than five 'external' lows. Using the one-off 'A' shown yields a 587.77 midpoint support that has already been breached by a decisive $3.25. This implies that if the stock doesn't rebound sharply into next week, it could grope its way down to the 'D' sibling at 555.29 before finding traction. Whatever occurs, I'll continue to track the stock closely and, if the perfect opportunity should arise, establish bullish or bearish positions as warranted using puts or calls.  Options on this $600 stock are much pricier than we are used to trading, and so any strategy would likely entail legging into butterfly spreads centered on distant strikes. That's the cheapest and least stressful way I know to "play direction," and we'll use

Over the three years that the Mother of All Bear Rallies has chugged steadily higher, the tedium of gratuitous ups and downs such as we have endured lately has always implied consolidation. In each and every instance, the broad averages marked time until there was sufficient good news -- usually the latest bailout fraud perpetrated by the European Central Bank --to trigger off the kind of short-covering that alone can drive stocks through ceilings of supply. Will it be different this time? My guess is that the answer will be found by closely monitoring the vital signs of that Mother of All Bellwethers, Apple, which at recent, peak valuations was the largest company in the world. Subscribers and permabears pay heed:  Rick's Picks' 'Apple Watch' has begun. Click here to follow the excitement in real time with a free trial subscription to Rick's Picks.

[Our friend Doug Behnfield, the savviest financial advisor we know, is skeptical about the dividend mania that has captivated Wall Street of late. In the essay below he explains why investors seduced by dividend-paying stocks may be overlooking more-than-offsetting risks and better opportunities. Doug works exclusively with high-net-worth individuals, many of whom are undoubtedly grateful for his prescient skew toward Treasury paper since the beginning of last year. To contact him about his services, click here and I will forward your message. RA] As you read this essay, keep Bob Farrell’s Rule #7 well in mind: "Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names." Most stock market participants can remember back to 2000 if they really try. It was common back then for typically risk-averse investors (like retirees) to be insistent that half of their portfolios consisted of Microsoft, Intel, Cisco and Dell. The price of each of these stocks had gone parabolic and none of them paid dividends, which was a good thing because that left them with all those earnings to plow back into their business. If the investor needed to buy groceries, they could just sell a few shares for cash flow. My, how things have changed. Today, "dividend paying stocks" are all the rage. McDonalds, Proctor & Gamble and Johnson & Johnson are emblematic. Apple has just begun getting into the act by declaring its first dividend and Intel and Microsoft are now on the list after ramping up dividends soon after the tech stock meltdown in the early 2000s. What these companies have in common is that they are blue chip names and they have taken on a "one decision" aura. For example, Proctor & Gamble has raised its dividend every year for 55