April 2013

Google's take-no-prisoners short-squeeze could go another 20 points before it hits something solid. There are two daunting impediments, actually:  March 6's all-time high at 844.00, and the 839.58 Hidden Pivot target of the pattern shown. Yesterday's close above the 818.08 midpoint resistance implies the target is likely to be reached, so camo trader should position from the long side for now. If we attempt a 'camouflage' short up there, we'll do it with put options and theoretical risk of no more than 0.20 ($20) per contract.  Click here for a free trial subscription that includes 24/7 access to the chat room and intraday trading alerts in real time.

A push to new record highs seems a foregone conclusion at this point.  The futures are exactly where they were three weeks ago, when I drum-rolled a 1494.25 target as a potentially important high. That could still be the case, since the target itself, missed by 1.25 points, remains viable. It wouldn't be the first time a bull trap was sprung at a marginal new high. As a practical matter, let's plan on getting short at a hitherto unremarked target that comes from the weekly chart. So that the target doesn't become a sitting duck for front-runners, I've provided coordinates in the chat room so that you can calculate it yourselves. They can be found in a post at 00:49 Tuesday, the first of the day.

Propelled by a new housing bubble and little else, how much higher can stocks go? Yesterday's rally vexed those who would deign to ask the question. The following post at ZeroHedge sums up the contrarian's sorry plight as Wall Street parties on: "If this doesn't send the S&P to new all time highs nothing will. Moments ago the Dallas Fed reported its April General Business Activity report and in short it was the biggest miss to expectations on record, plummeting from 7.4 to -15.6, on expectations of a 5.0 print and the lowest since July 2012. It was also the biggest one month drop on record. Since all of this will be attributed to balmy spring weather in New Zealand, extra rainfall in the Russian Steppes, the US sequester, evil European fauxterity, Cyprus deposit confiscation, and of course, Bush, there is no point in commenting on this disaster at all. "And why comment: judging by the market's response which is now at the day's highs, it is not as if anyone even pretends any data matters. The only hope now for those expecting a 20,000 on the DJIA is that the ISM due out soon, will print at 0 and everything will be permanently fixed. In other news the daily prayer to praise St. Bernanke begins at 11 am when POMO ends. Please orient yourself to face the Marriner Eccles building when bowing down." Incidentally, today's E-Mini S&P tout provides a possible answer to the question, How high can stocks go?  Check out my 00:49 post in the chat room for specific details and actionable advice.

No one ever looks back with nostalgia on Wall Street’s good old days; for in fact, there never were any “good old days.” The stock market was always the same sleazy carnival game that it is today, a hoop-toss rigged to make the rubes think that winning is easy. Of course, the easier it looks, the harder it is. So it goes for investors sauntering along the global midway. You’d think that with equity shares in their fifth year of the most powerful bull market in history, every Tom, Dick and Harry would be a winner by now.  What we find instead is that the individual investor has yet to recover from the dot-com crash, and that some of the savviest players in the game have left it, unable to beat the averages. Soros folds Quantum fund, embarrassed by his failure to deliver even modest returns.  Buffett sinks $23 billion into…the food chain. Jimmy Rogers kisses off the American Dream and relocates to Singapore, while Steve Wynn heads to Macao. Don Trump and Jim Cramer seek, not wealth from investing, but ego gratification from over-exposing themselves on television. Meanwhile, the trading pros who have elected to stay behind lead the lives of wild dogs, fighting for scraps as they nip at each other’s hinds.  Dreaming of hell, they snarl in their sleep, eyelids open just a slit. They dare not drift off, since the partially eaten carcass next to which they lie would surely be gone by morning, stolen by even wilier predators. Such primal fears must have entered the minds of prop desk traders last Tuesday, after the Associated Press reported on Twitter that there had been an explosion in the White House. In literally the blink of an eye, stocks plunged violently on the news. Moments later, however,

With gold up $15 late Sunday night, I've put out the yellow flag.  The June Comex contract will need to bulldoze some daunting impediments not far above to prove that this bounce is the real McCoy.  Check out Monday's tout and the accompanying chart for specific details.

The rally has generated a modest impulse leg on the hourly chart, although not yet the buy signal that would come at 281.55.  The burden of proof will remain on bulls until they can close this vehicle above a midpoint resistance on the 60-minute, at least. At the moment, that implies 280.13, but that's only if the 273.98 point 'C' associated with that number survives.

Take your pick of several downtrending abc's.  If the futures do in fact head lower, my choice is the one shown, with a 1567.75 target. You can try bottom-fishing there, one contract, stop 1566.75; or four contracts if you use camouflage that limits your theoretical loss to no more than 3-4 ticks per contract.  Please note that the 1574.50 midpoint support has already been breached as of late Sunday night.  Alternatively, if buyers come out swinging, there's a veritable forest of 'external' peaks you can use to find a subtle entry opportunity unlike;y to be perceived as a breakout by the competition.

There are some unfulfilled targets not far above Friday's 1485 high, but the futures appear to be struggling hard for those last few yards. Rather than navel-gaze the meaning of it all, we elected to bail out of a long position on Friday, based on a stop-loss at 1470.30. Traders who followed my advice exactly would have come away with a one-day gain of about $4300.  There will always be another opportunity to re-board, of course, but because a top of at least short-term significance seems almost guaranteed just above 1500 if the futures get second wind, we shouldn't be too desperate to re-establish a long position from these levels. Specifically, there are resistance points, previously noted here, in the form of a Hidden Pivot target at 1507.20, as well as a Fibonacci-based level at 1505.00 that would equate to a 0.618 retracement of the downdraft begun in late March from 1618.  An additional resistance not mentioned earlier lies at around 1583 (see inset), where a trendline we'd been using earlier, and whose breach in February foretold gold's recent troubles, comes in. _______ UPDATE (April 29, 11:50 p.m. EDT):  Camouflageurs can use the 1495.00 'external' peak I've highlighted (inset, a new chart) to get long, although more immediately there are three others that could prove equally serviceable provided the impulse leg that exceeds them is not too obvious. The rally targets given above will obtain nonetheless, but odds would still favor bulls for the very short-term. ________ UPDATE (April 30, 9:26 a.m. EDT): This morning's bull trap implies that the bounce from mid-April's grossly oversold lows is sputtering out. The manifestly fraudulent, distributive rally was sprung at 4 a.m., and although it took out two prior peaks without a pause to create a promising camo set-up, the trade that resulted

There are some fine nuances of camouflage in this lesson, including the use of the very subtlest of ‘external’ peaks to get us long in June Gold two days earlier. The trade had gotten stopped out earlier the same morning, providing a further opportunity to discuss in detail the technique of creating stop-losses based on impulse legs. The chief value of such stops is that they allow us to, if not ‘swing for the fences,’ then to weather adverse moves that would tend to eject traders using conventional stops placed just beneath prior lows. ____________________________________________________________________