January 2012

I'm establishing a tracking position in March Natural Gas, since I've heard from a subscriber who got long last week at 2.305, the Hidden Pivot target that I first identified here around Thanksgiving as a potentially important low.  The actual low occurred at 2.289, or 1.6 cents beneath the pivot, so 2 cents is the tightest stop-loss you could have used that would have survived. Assuming four contracts bought and risk:reward held constant at 1:3, that implies an initial partial profit-taking interval on two contracts six cents above the entry price, at 2.365; and on a third, at 2.425. That leaves us with, in theory, a single contract whose cost basis adjusted by paper profits reckoned so far is 2.121.  For now, use a stop-loss at 2.458, which is where the hourly chart would turn bearish via the creation of a downtrending impulse leg. We'll be swinging for the fences on this one, so I'll offer no exit target for the time being.  Odds that we actually caught the bear-market low within two cents would shorten once this vehicle has created a bullish impulse leg on the daily chart. From current levels, that would imply a thrust exceeding the 3.006 peak made on January 4.  A penny is worth $100 in this vehicle, so our paper gain so far amounts to about $4,000.

Poring over the charts of bullion and the E-Mini S&Ps, we stalked a few trades but found no promising camouflage triggers to exploit. We also took a close look at Apple’s (AAPL) charts, finding things to like, although perhaps no longer to love; and at the charts of Research In Motion (RIMM), which could fall to as low as 5.67 from a current price of about 16.

March Gold has pulled back by $17, narrowly missing the stop-loss I'd suggested at 1713.10.  This has not affected a bullishly impulsive pattern shown in the chart accompanying today's tout, nor the strategy I've outlined for getting longer.

October's 220-point impulsive rally has been driving this vehicle ever since, presumably toward a 1362.25 target that looks no less compelling after a day of weakness such as we saw yesterday. Still, because we wouldn't want to miss out on the Short of the Year just because the E-Mini S&P didn't quite reach our target, we'll keep a close eye on all abc retracements, especially near their 'p' midpoints.  The nearest lies at 1311.25 and can be seen in the accompanying chart. If the downtrend overshoots it, that would be a mildly cautionary sign for bulls.

The rally handily exceeded my minimum objective at 29.61, creating a powerful new impulse leg in the process. Camouflageurs should use the 'X' trigger of the pattern shown to buy 400 shares, assuming such an entry signal is created.  If this occurs when I am at my desk, I'll put out an alert in the chat room and via e-mail.

For your guidance, I am tracking a single contract whose 1701.30 cost basis has been reduced by paper profits taken on three contracts exited along the way. The suggested stop-loss at 1713.10 is cautious but justified in my opinion, since Wednesday's rally spike was triggered by Fed news whose impact may not linger. In fact, there was no lingering effect whatsoever on stocks, which sold off moderately.  Why? The announcement that interest rates would be "held" close to zero for the next three years was about as unsurprising as anything the mountebanks and charlatans at the central bank could have ginned up in the way of a press release. Despite the tight stop-loss, I view the latest price action in Gold as quite bullish, since the peak of yesterday's powerful lunge created a brand new impulse leg on the intraday charts (see inset). Even so, the pullback needed to set up a second thrust could be punitive -- sufficiently so to turn our theoretical gain into a loss. This I am not willing to abide, especially since we can re-enter at will any time using camouflage to keep risk tightly under control. That said, night owls can use the pattern shown to buy four more contracts. The implied risk per contract would be $350 (25% of the A-B leg) using the large pattern, so you'll need to execute the trade camo-style at an 'X' entry trigger of lesser degree to keep theoretical risk below $80 or so per contract. _______UPDATE (11:45 a.m. EST): Using the larger pattern (with a one-off A at 1703.70),  entry was signaled at 1721.20. Since I'd cautioned against using an 'X signal with such a large stop loss, we'd have looked for our camouflage opportunity on a chart of small degree. The 3-minute chart (inset) shows

For breathtakingly stupid political ideas and catastrophic “solutions” to America’s biggest problems, it’s hard to beat the New York Times op-ed page.  There, joined by such jihadists of the Left as Frank Rich and Maureen Dowd, resides the peerlessly wrong-headed economist Paul Krugman, whose Nobel Prize was as well-deserved as the one Yasser Arafat received for helping to bring Peace to the world. Until yesterday, we might have thought Krugman had cornered the market for the absolute worst ideas on how to revive the economy. Here’s a guy who actually seems to believe, in his heart of hearts, that the reason this has not yet occurred is that the central banks of Europe, the U.S. and Japan have not thrown enough money at the problem. We stopped counting stimulus dollars and guarantees ourselves when the total hit $15 trillion a couple of years ago. That was long after we’d become convinced that deficit spending in such cosmic quantities, far from reviving the economy, would ultimately bury the U.S. in debt. As it has.  Such concerns pose no problem for Krugman, however, since he simply avoids using the word “debt” in his Martian-friendly economic essays. There are so many world-class crackpots in Krugman’s chosen field that it was all but inevitable a colleague would surface to challenge him for the top spot in the Dismal Science Hall of Shame. Enter one James A. Wilcox,  author of an op-ed piece on Wednesday that purported to offer  “A Way to Make People Buy Homes Again”.  Wilcox, a professor at Berkeley, of all places, says all that's needed to jump-start the residential real estate market is government mortgage insurance. Specifically, he suggests a one-time premium equal to one percent on the home’s purchase price, or $2000 for a house selling for $200,000.  At the

Several of today's touts are tradable, and the very bullish target for the E-Mini S&Ps corroborates a 13085 Dow target first broached a while back.

Use the 1362.25 target shown as an incentive for getting long. The gap through the 1252.25 midpoint strongly implies the target will be reached, although camouflage will be most difficult to come by with the rally so ridiculously overextended. The chart shows how two subtle details shorten the odds of the target being achieved.