May 2013

If you're inclined to doubt Apple's supposed resurrection, check out today's tout, since it offers some wiggle room for skepticism. We'll give the rally the benefit of the doubt nonetheless, and for those inclined to trade on it, a specific threshold at which our confidence in the bullish story might reasonably grow.

Bears' best efforts yesterday weren't sufficient to push this vehicle remotely near a 1623.75 downside target I'd proffered. Now let's see if bulls have the gumption to forge higher, first by pushing past the 1660.75 'p' midpoint pivot shown. Long entry has been triggered Thursday night at 1655.75, and so the pattern is fair game for camouflageurs looking for a low-risk buy-in. DaBoyz aren't likely to goose the rally to D=1670.50 overnight, although it looks like a pretty good bet to reach p=1660.75.  Thereafter, traders might have to abide a second (i.e., lower) point 'C' before this hoax can find purchase on the morning's news.

I'm not completely sold on Apple's supposed rise from the ashes, mainly because the initial phase of the stock's would-be resurrection failed to get past the 469.95 peak of March 25 (see inset).  In technical terms, this means that the rally was not bullishly impulsive on the daily chart.  And while it is most surely impulsive on the 'hourly,' we should expect more from a stock that is attempting to emerge from a nasty bear market.  That said, we can nevertheless extrapolate a serviceable rally target a 492.15 from the pattern shown, even if we must bend the rules slightly to call the 392.50 point 'A' a true low.  The midpoint 'p' of the pattern lies at 455.52, a hair above yesterday's high, and AAPL's ability to punch through it -- or not -- should inform our willingness to believe that the current rally is the beginning of a new bull market. Regardless, the stock is a solid bull trade once above 455.52, and we should continue to go with the bullish flow as long as each new thrust pushes past a prior, significant peak.

We often tell subscribers to leave options trading to the experts, since, for retail customers, the game is almost as tough to beat as betting on horses.  But not quite.  We’ve been at it for 40 years ourselves, and the knowledge we’ve accumulated over that time, including a dozen years making markets on the floor of the Pacific Exchange, has helped push us just past the 50 yard line that divides winners from losers.  Which is to say, we come to each trade with a positive expectation.  A case in point is a bull play in Goldman Sachs that we recommended nearly three months ago.  Back in March, we reckoned that if the stock market were to go bonkers, as it indeed has, then Goldman would almost surely be one of the stocks leading the charge. This idea proved flat-out wrong, but as you’re about to see, not fatal. We had told subscribers to buy far-out-of-the-money Goldman calls to leverage the scenario, but because we were attempting to buy them at fire-sale prices, the options stayed just out of reach. Until one day, that is, when the stock got sacked. That was on April 1, and when the dust had settled, we were able to write as follows:  “With Goldman shares at a precipice, the July 195 calls we’ve been attempting to steal came cascading down on us yesterday like summer rain.  I’ll treat the order to buy 20 of them @ 0.15 as filled, but as long as DaBoyz are jumping out of windows, let’s try to suck up another dozen, bidding 0.12 for them, good-till-canceled.  Be warned that I am suggesting this because it looks like the stock will fall a further $3, to at least 143.58 (see inset), before it can turn around.” [This is in fact

The inability of stocks to recoup all of yesterday's losses in the final hour qualifies as suspicious activity, since short squeeze rebounds-out-of-nowhere have become part of an entrenched routine in recent years.  I've proffered a bearish target for the E-Mini S&Ps accordingly. Now let's see how hard bears have to work to get there, since this detail could provide clues concerning a possible change in the major trend.

Silver violated a 21.475 midpoint support yesterday by a whopping 45 cents (120-minute, A=27.840 on 4/11) , strongly implying that it will sink all the way to 18.115 before finding a good bottom. Even so, the power of the reversal, like Gold's, has created an impulse leg sufficient to push the bear target at least temporarily out of mind. For camo trading purposes, I'd suggest starting with the 120-minute chart, since it is the largest degree with the potential to produce three single-bar coordinates the way we like 'em. I've sketched them out, along with a potential long-entry set-up for camouflageurs. _______ UPDATE (May 29): ZZzzzzzzzzzzzzzzzzzz.  _______ UPDATE (June 6):  No change:  Zzzzzzzzzzzzzz. _______ UPDATE (June 12): Prospects have taken a turn for the worse with recent weakness that points as low as 18.115 should the downtrend begun from mid-April's highs near $28 should turn ugly again.  A lesser pattern that projects to 18.705 will give Silver a chance to turn around from 20.997, the 'p' midpoint support.

Something will have to give, although crude could continue to screw the pooch for yet another month or two before it runs out of room to meander inside the pennant formation shown. My hunch, based on an earlier prediction of sub-2% yields, is that the breakout will be to the upside.  Until we see it happen on a chart of lesser degree, however, this vehicle will remain strictly a day-trader.

Even on the weekly chart (see), the savaging that T-Bond futures have received this week looks pretty nasty. Still, the move is not quite bearishly impulsive, since sellers would have to drive this vehicle beneath the key low of last March to achieve that. We should expect an 'intervention' soon in any case, since T-Bond futures have typically reversed when the technical picture started to look this bad.  Camouflageurs would be well equipped to buy any bounce that follows a marginal breakdown beneath the March 2012 low, 138^28. (Please note that this chart tracks a continuous contract. A more 'scientific' better yields a corresponding low at 135^05.)

The fact that DaBoyz failed to rally stocks back to unchanged yesterday bears watching, since it's been a while since anything that weird has happened. The Indoos were down 180 points at their nadir, but it should have been a piece of cake to short-squeeze a loss of that size out of memory. Assuming sellers prevail for an unthinkable two days in a row, traders should use the 1623.75 Hidden Pivot shown as a minimum correction target. We looked at this pattern during yesterday's tutorial session and found things to like about it, including a beautifully carved, one-off point 'A'.  Since the target is a comfortable four points above an obvious shelf of structural support created earlier this month, you can bottom-fish with a stop-loss as tight as 1622.75 -- or via camouflage, which will usually be the preferred way of getting aboard.