July 2011

The Dow continues to outpace the S&Ps, most recently by exceeding an important peak from May 10 that was bears' next-to-last hope for containment. This is quite an impulse leg we are witnessing: an 880-point run-up that so far has smashed no fewer than one internal and three external peaks with barely a pause. If it were Gold or Silver doing the smashing, I'd probably infer there's enough latent power here to push the blue chip average 20% higher.  Since it is only the Dow, however, I'll call it the most deadly bull trap -- and bear squeeze -- in a hundred years.  Yeah, you're right, I should skip the blather and stick with my charts.  I will, I absolutely promise, but please don't begrudge me my sometimes fantasy that the scumballs who have been enabling this epic hoax since March of 2009 will eventually get their comeuppance.  (You could be forecasting like a pro yourself, and soon. Click here for further details -- and a $50 coupon.)

DaBoyz may have trouble restraining Silver for yet another day, since there are two robust impulse legs at work that both want to push the September contract above the nettlesome, 36.785 high recorded on June 22. The smaller of the two patterns (60m, A=35.065 on July 5 at 4 a.m. EDT, and B=36.300 on July 7 at 2 a.m.) projects to 36.395, but a close above that last number would make the 36.970 target of the larger pattern an even money bet for early next week. _______ UPDATE (11:33 a.m. EDT): Silver is being toyed with, but not by anyone who will be able to hold it down next week.  The apex of today's fleeting surge occurred between my targets, eight cents short of the higher one. It remains valid nonetheless, but it will not be easily tradable.

The futures looked like they were being heavily sat upon yesterday, rendering them unable, even, to hit the modest 1534.50 midpoint resistance of the pattern shown. It projects fully to 1546.80, but as always, we'll need to take the rally one consequential step at a time to make good (and useful) sense of it. 'Camo' attempts to get long are not advised for night owls due to the heavily manipulated look of yesterday's price action. _____ UPDATE (11:30 a.m. EDT):  The 1546.80 target caught the high of today's $15 rally within less than a dollar. More power to you if you were able to make it pay off.

It could have been just coincidence, but yesterday's wilding spree stopped at 1352.75 -- precisely equal to an important peak recorded in mid-May.  Although that wasn't the highest high achieved by the still-raging Mother of All Bear Rallies, its breach would probably make the actual peak at 1367.50 a sitting duck.  It will only take a print at 1353.00, however, to generate a bullish impulse leg on the daily chart that will have exceeded not only the required internal and external peaks, but a second external for good measure. The 1382.25 target given here earlier remains valid whatever happens, but more immediately we should watch for fatigue near 1354.00, the Hidden Pivot target, on the hourly chart, of A=1313.25 (July 1), B=1340.75 (July 5). _______ UPDATE (11:24 a.m. EDT): Stocks are falling sharply today after topping overnight at exactly...1354.50.  They are acting as though the 9.2 percent jobless rate somehow took the markets by surprise, but this idea is too stupid to credit. More likely is that we are seeing a garden-variety shakeout. The 1382.25 target will remain valid in any case, provided its point 'C' low all the way down at 1252.25 is not breached.  That said, this downtrend could reach 1314.00 if the 1326.00 midpoint pivot associated with that midpoint gets taken out. Camouflageurs are encouraged to look for a tradable turn from either number.

It was Christmas in July yesterday, statistically speaking. Jobless claims fell last month, private businesses hired more workers than had been expected, and retail activity picked up enough to get vendors talking about reining in discounts. Wouldn’t that be swell for them!  By the time actual Christmas rolls around, we could all be paying retail – retail! – for all kinds of great stuff, putting America back on track for the kind of sustained recovery that might last until, oh, maybe early January.  One thing’s for sure: Shoppers won’t have much trouble binging beyond their means if they’ve been getting the same offers from the banks that we have recently. Balance transfer loans at rates under 2% now seem to be the norm, even though it wasn’t too long ago that the fees were more in line with what Frankie the Camel charges guys who are keen on preserving their kneecaps. Kneecaps were not even a distant concern on Wall Street. Ebullient as ever and wildly oblivious to the discouraging word, speculators greeted the news by embracing risk as though tomorrow would never arrive. The Dow Industrial Average was up more than 120 points shortly before the close, and although it sold off slightly in the final moments, shares looked poised for yet another risk-embracing spree into week’s end.  At the bell, the blue chip average had gained nearly half of the 900 points we predicted here on June 30.  Speculators’ devil-may-care lunge for shares was especially impressive given that the price of oil --- and therefore the future price of nearly everything else – was in a steep climb, extending a rally that in less than two weeks has tacked $10 onto the price of a barrel. That can add up in a world that consumes 80 million barrels

Careful here! If you've been long IBM based on the very bullish forecast I disseminated a few weeks ago during an impromptu online session, the stock is closing rapidly on a 183.35 target.  Traders can get short there by buying two August 175 puts, no stop. ______ UPDATE (2:58 p.m. EDT):  We bought the puts for 1.20 when IBM gapped nearly six percent higher this morning on stellar Q2 earnings. The intraday high has exceeded our target by 1.34, but we'll stick with the position anyway because the pattern and target are so compelling.  And yes, I had expected the stock to top within pennies of the target, so there is more risk here than originally intended.

Although I frequently call attention to rallies that have chickened out just shy of some external peak, in this case August Crude's ability to exceed just such a peak, even if by only a hair, is reason for a bullish bias, at least for the near term. The 99.68 target of the pattern shown looks like it's in-the-bag, since its 96.57 midpoint sibling has been handily exceeded. ______ UPDATE (12:55 p.m. EDT): The futures rallied sharply, peaking at 99.42.  Since this vehicle does not deliver the absolutely precise target-hits of, for one, the E-Mini S&Ps, the 26 cent shortfall should be regarded as insignificant and the target as having been achieved.  Typically, when we initiate trades in Crude against the swings, I advise allowing leeway of at least 21 cents.  Actually, that is the main reason we do not often trade this vehicle -- i.e., because it does not always perform perfectly in line with our expectations.

Silver and Gold were in promising, shallow corrections late Wednesday night, and so my projections do not take into account the possibility that their respective rallies will be derailed before reaching the station.  Ditto for the E-Mini S&Ps, which are looking quite feisty at the moment.

Silver looked like it was waiting for gold to catch up before taking on the June 22 high at 36.875. Wednesday night's mellow action seemed likely, for starters, to develop thrust enough for a push to the 36.990 target of the pattern shown.  Night owls looking for a safe spot to board should consider impulsive opportunities as subtle as the developing one that I've highlighted in the chart.  Please note that I've slightly doctored the chart. If you can determine how, you're well on your way toward discovering an opportune entry spot on your own.