January 2012

The March futures are within pennies of achieving the uber-bearish 2.305 target given here around Thanksgiving, when they were trading nearly 60% higher.  While there can be no guarantees that a major bear rally is about to unfold, it is an opportune moment for camouflageurs to hunker down on the lesser charts, there to await a potentially tradable turn. _______ UPDATE: I posted the following in the chat room shortly after 1 a.m. EST:  To see (almost) exactly the kind of opportunity I'm talking about, locate the following NGH12 coordinates on the three-minute chart: A=2.334 at 9:30 p.m. EST; B=2.350 at 9:54 p.m., and C=2.343 at 10:09 p.m. If you spotted the flaw -- a two-bar point 'C' -- then go to the head of the class. The bad news is that if the little sonofabitch is not giving us exactly the pattern we want on the first instance of an upturn on the very lesser charts, it's going to be tricky to get on board. Regardless, I'd stick with the '3' to find a way aboard.   Click here to find out about the upcoming Hidden Pivot Webinar and receive a $50 discount.

On the greater intraday charts, this run-up became more than mere noise yesterday, and it would mutate into a mild curiosity if it continues up to 1.3086 (see chart) without pausing for an official 'b-c' breather.  I say "mild curiosity" because I've become inured to the possibility that anything of substance could change for Europe. Bankruptcy or hell-of-inflation are the only possibilities, and so it seems logical to view any rally in the euro as a bear rally. Regardless, technicals will always come first, and so we must simply wait and see how well, or if, the futures handle the 1.3085 'external' peak that lies not far above.  Want to learn how to forecast and trade like a pro?  Click here for a free trial subscription to Rick’s Picks.

A modest rally target at 1681.50 is still the only game in town, and I'm not even going to reproduce a chart that shows it today, since we've already done that to death.  The ostensibly bullish dirge is to be expected, since gold has hitched its wagon to a stock market that, while headed predictably higher, is so lacking in energy and inspiration as to be incapable of gaining more than an inch or two per day.  This being a Friday, and current price action comprising little more than dueling pansies, I'll offer you nothing bold.

The latest bullish impulse leg on the weekly chart looks a bit ragged, but it deserves our earnest respect because it surpassed no fewer than four peaks, two of them 'external'.  The pullback is already sufficient to have recharged DXY for a thrust to as high as 83.90, but my gut feeling is that it will back-and-fill for another week or two before it gets traction.

Although there are somewhat higher targets yet to be achieved, yesterday's top came within 1.00 point of the target shown and therefore offers a possible opportunity for shorting.  We haven't done much of this since the Mother of All Bear Rallies began in March 2009,  but it's probably time to practice getting short in case 2012 fails to live up to the ebullient expectations Wall Street's shills.   When you've had a look at the chart, check out the one-minute bars if you're a night owl looking for action.  As of around 9:45 p.m., good opportunities were non-existent, but your patience could yet yield a winner.

[We wrote the following column for the Sunday San Francisco Examiner a month before the dot-com bubble burst in March 2000. Overnight zillionaires were a dime a dozen back then because countless investors couldn’t wait to pay practically anything for the shares of unproven companies. Nowadays, billion-dollar scores on Wall Street are much rarer, but as the lucrative IPOs last year for LinkedIn and a few other purveyors of Vaporware II demonstrated, enough greed and stupidity still remain to make canny stock-promoters rich. RA] It's said we are separated from the rich, the powerful and the famous by a chain of no more than six friends of friends. This means that if you are looking for a job in the White House, or a way to meet Winona Ryder, it should take no more than half-a-dozen phone calls to get in the door. But I'm beginning to wonder whether it would take even that many calls, on average, to reach a friend of a friend with eight-figure net worth. There seem to be so many of them around these days. More than lottery jackpot winners, as far as I can tell. Although I personally know a dozen guys who have reaped spectacular riches from stocks in the last few years, I've only known one big-time lottery winner in my life — "Bunky" W., who wrestled heavyweight for Atlantic City High School in 1967. Bunky hit the New Jersey lottery for $1 million, which made him a celebrity at our thirtieth reunion, held at Trump's Casino in the summer of 1997. But these days, with Wall Street's IPO boom sprouting megamillionaires like dandelions in May, a story like Bunky's would barely raise an eyebrow at the next reunion. Arthur’s would, though. He is a childhood friend and among the brightest students

We confirmed a bullish outlook for stocks with a close look at charts for the Industrial Average and the E-Mini S&P. We also looked at ways to force trades when the pickings are slim. Usually, this entails zooming down to a small enough time frame to find ABC patterns suitable for our purposes. Finally, we considered some specific reasons why the odds are heavily stacked against retail customers who would attempt to trade puts and calls. From a risk:reward standpoint, unless you’re capable of nailing swing highs and lows consistently, you’ll get a better bet at a $2 parimutuel window.

The 20.27 target of the bearish pattern shown remains valid, although bulls can take encouragement from the fact that the futures seem so reluctant to get there. More bullish still -- decisively so -- would be an impulsive thrust exceeding the 32.69 'external' peak labeled on the chart.  Failing that, the stock would nevertheless be a compelling buy on a fall to 28.98, the midpoint support of the ABC pattern shown in purple.

The futures remain on track for a rally to 1681.10 (or perhaps 1681.50), but the pattern that presumably will get them there is sufficiently clear and compelling that I'll suggest shorting near the target via a 'camo' entry.  Keep in mind that the position is to be implemented with four contracts and that the theoretical risk (i.e., the distance between the signaled X entry point and the point 'C' low of the pattern) be no greater than $70 per contract. I hesitate to suggest substituting mini-contracts to achieve this, since the dangerous illiquidity of mini bullion futures more than offsets the peace of mind we might hope to get trading a downsized vehicle.