Tuesday, February 19, 2013

Let's plan on getting together Tuesday morning to take a timely look at some key charts.  The session will start at noon EST and will be accesssible via a link published a half-hour earlier in the chat room and disseminated via the E-Mail Notifications system. Click here if you don't subscribe but would like to attend.

We hold four nearly riskless March 840-850-860 butterflies for a 0.20 debit each.  This position could pay off at 50-to-1 odds or better if the stock continues along the upward trajectory it has maintained since before Thanksgiving. A crucial test of its ability to do so is near, however, in the form of the 792.85 Hidden Pivot target shown in the chart.  The stock has traded slightly above it Monday evening, hitting 793.26, but it'll need a little more loft to conquer the target decisively.

A 1548.25 target has loomed for weeks, and although it is almost guaranteed to provide tradable stopping power, we should remain alert to the possibility of a sharp downturn from somewhere below it. I am recommending shorting 1548.25 via camouflage, which means you should be looking for a tradable abc downtrend from around the time that 1545.50 is reached. Alternatively, if you are not comfortable with the 'camo' technique, you can simply offer at 1548.25, stop 1549.25, but there will be increased risk of missing the trade. I am aware of a couple of household-name gurus who are looking for a top around the same price, which will make a 'camo' entry strategy even more useful for us. More immediately, a 'premature' shorting opportunity could take shape if a pattern like the one shown occurs. Notice that although the point 'B' low is 'sausage', the impulse leg will have surpassed two other, distinctive prior lows.  Incidentally, I have deliberately avoided drum-rolling this target publicly so that it might have a better chance of working.

Gold was moving moderately higher Monday evening, presumably gratuitously, following the resumption of trading after a three-day holiday weekend. The April contract is up about $5 at the moment, trading around $1614, but it would take a print at $1629 to turn the hourly chart impulsively bullish.  If that were to occur, notice that the bigger picture would still be bearish, since, as you can see, Friday's nasty dive created a bearish impulse leg on the daily chart.  The larger, corrective pattern that subsumes that leg projects to 1569.90, a target given here earlier. Its midpoint sibling lies at 1634.90, and so any rally to that number should be regarded as an opportunity to get short. Camouflage is recommended if you try it.