Friday, February 8, 2013

The heavy chop of the last week has occurred about 60 points shy of the clear-as-day 14085 rally target shown, hinting that it could be a distribution rather than a consolidation. A feint higher that actually reaches the target would make for a great bull trap, and so we should be ready to get short if it happens. However, we'll need to be on our guard as well against the sucker-punch that would come by way of a sudden drop out of this zone.  It would almost surely happen via a gap-down opening that has provided no great opportunity to get short.  If the Dow were to open a hundred points lower tomorrow, for instance, few bears would be aboard, since they should have gotten shaken out already by the 100-point daily swings that have become all-too routine.

Yesterday's short-squeeze spike stank of distribution, hinting of lower prices to come.  Even so, I'm going to suggest using the 'external' at 18.60 (see inset) to get long via a camouflage if the opportunity should arise.  Specifically, any b-c pullback from within the range 18.61 - 18.64 should be leveraged simply by buy-stopping your way aboard at the calculated 'x' entry price of the pattern. Otherwise, use a straight bid if the stock feints lower and finally hits the 18.28 target it has been teasing for the last two days.  Bid 18.31 for 400 shares, stop 18.19. ______ UPDATE (February 11 at 10:04 p.m.):  The little hoser stopped us out for pocket change, hitting a low of 18.01 intraday.  Let's try again, bidding 17.88 for 400 shares, stop 17.79. The not-exactly chopped-liver target at 17.85 is shown in the chart.  _______ UPDATE (11:03 a.m. EST):  The stock bottomed at 17.85, precisely on the target, then rallied 27 cents to a so-far high of 18.12.  The move is not yet impulsive, even on the lesser intraday charts, but it would become so on a print exceeding 18.17. For now, maintain a stop at 17.79, but if and when GDXJ gets above 18.17, switch to an "impulsive stop" on the 5-minute chart.  This means you would exit the position if a bearish impulse leg is generated on the "5".

Two weeks into Apple's attempt to find a bottom, it has made barely any headway back into the devastating 50-point gap recorded on January 24. This is hardly the behavior of a stock that is raring to get back in the game. Nor was the $8 overshoot of the 443 target shown very encouraging (see inset). That's why I'm sticking with the 394.93 target given here previously as my minimum downside objective.  As noted here earlier, a rally to 494.59 is probably where this correction would max out, as well as a place where we should try shorting aggressively.  Camouflageurs needn't wait for this, however, since the 15-minute chart is providing opportunities almost daily to test the water without risking much. _______ UPDATE (February 13, 2:44 a.m. EST):  Use the 461.84 target shown to bottom-fish 100 shares with a 461.69 stop-loss. If the order fill and the stock reverses to hit 465.00, switch to an impulsive stop-loss on the one-minute chart. This means you should exit the position if a bearish impulse leg is created on the one-minute.  Please note that this update doesn't change my earlier advice and outlook.  _______ UPDATE: (February 19): The bounce occurred from 463.22, and so we did nothing.  With the downtrend back in force, our focus should now be on the 394.93 target.  Trade bearishly if at all. (Note: In the chat room, 2/20 at 14:19, I've posted coordinates that would have made shorting AAPL this morning as easy as shooting fish in  barrel.  One the one-minute chart (see inset), A=460.08 on 2/19 at 4:00 p.m. EST); B=455.80 on 2/20 at 9:30 a.m.; and C=456.50, for X=455.43. Note single-bar coordinates at all three ends.)  _______ UPDATE (March 4, 2:01 a.m.): Apple continues to work its way south toward our 394.93 target.  More immediately, be

[The author of today’s guest commentary is Brad Culkin. A regular in the Rick’s Picks forum, he is the founder and CTO of a medium sized capital-equipment manufacturer. RA] What’s next for investors? It helps to know what’s happening now and what happened in the past. Whatever the facts, don’t expect life to be like the box of chocolates -- “you never know what you’re going to get” -- that Forrest Gump like to offer up. If you think like him, you had better "run, fool, run!" since the future will bring you only inexplicable chaos. For me, at least, trying to predict the future only makes me nostalgic for the past.  When I think of the 1980s, I remember a more innocent time.  Financial intermediation was an actual service.  Bankers and brokers were like Yenta, the matchmaker in Fiddler on the Roof.  To them, savers, investors, borrowers and entrepreneurs were like earnest and forthright men seeking comely brides for happy and productive partnerships.  The marriages didn't always work out -- but hey, that wasn’t Yenta's job; she just made the introductions. By the time the 1990s rolled around, we knew more than a few Yentas who were hooking up savers with, um, inappropriate dates. Economist  Hyman Minsky, who knew a Ponzi scheme when he saw one, would not have approved, since the hookups were creating balance sheets with non-existent assets, poor cash flow, and principal that was unlikely to be returned unless via new investors recruited to keep the game going. Many commented on this sea change at the time, as companies with no history, no seasoned management, no sales, no earnings, and no real assets went public and borrowed.  Bad Yentas indeed. We might have hoped this sort of mass folly would have ended with the dot-com crash of