February 2012

Yesterday's rally began at the Hidden Pivot midpoint of a minor correction pattern, implying that the rally that has ensued is likely to pick up steam. Strong bull trends tend to produce downward retracements that do not reach their 'D' targets, and that is indeed what has occurred.  Night owls should look for 'camouflage' opportunities on the one-minute chart, where I've labeled a couple of possibilities (see inset).

A school shooting in Ohio left one student dead and four wounded. It also pushed the other big story of the day – Angelina Jolie’s wretchedly skinny arms and legs -- below the fold by dinner time. But the real shocker was a story that said eating certain kinds of fish or taking fish oil supplements can actually do the body good. Specifically, the omega-3 fatty acids that are so abundant in fish oil appear not only to sharpen the mind, but to slow the aging process, improve cardiovascular health and reduce inflammation and joint pain. That’s quite a list, and it’s particularly good news for your editor, since, on his doctor’s advice, he began taking a fish oil supplement several years ago.  Not the cheap stuff, which the doctor said could cause more harm than good, but high-dosage, pharmaceutical-grade fish oil that supposedly contains no traces of mercury or other seaborne toxins. As for the benefits, while it’s true that, at the ripe old age of 62, we have been forgetting to zip up our fly about half the time and leaving credit cards on store counters perhaps twice a week, we remains convinced that the consequences of our forgetfulness would be a lot worse if not for the fish oil.  Meanwhile, the story on the evening news about fish oil’s undeniable benefits is about as man-bites-dog as it gets, since health care professionals have done their darndest over the years to promote the idea that only prescription drugs are effective in curing what ails us. Putting aside the fabulous press Vitamin D supplements have enjoyed recently (undeserved, according to my doctor)  just about every supplement you can think of has been vilified over the years by medical science: St. John’s Wort, melatonin, zinc, biotin, Vitamins E, C, B

This weekend, Rick was a guest on The Korelin Economic report. Rick and Al Koreling discussed gold, silver and junior mining issues. The link can be found here. Rick's is segment #3.

Much as April Gold has all but locked up a push to at least 1820, April crude has presumably turned a rally target at $120 magnetic. Both vehicles popped through Hidden Pivot midpoints so decisively last week that it is difficult for  me to imagine their failure to reach their respective 'D' targets, presumably later this week or early next. The considerable downside for the world is not just that energy prices are once again about to be goosed into the stratosphere by speculative forces, but that the speculative action itself implies a greatly heightened risk of military conflict between Israel, Iran and conceivably the U.S.  Camouflage entry opportunities will be hard to find following  last week's breakout, but the best place to look will probably be the 3- or 5-minute chart (where, it must be noted, no legitimate 'external' peaks to leverage exist at the moment).

Friday's highs somewhat exceeded the 35.635 target we'd been using, which is bullish.  More bullish still is the fact that price action since appears to be a consolidation above the wraith-like supply zone highlighted in the accompanying chart. It is the last distinctive pocket of supply between current levels and the low $40s, and because it has already been penetrated impulsively, bulls now should be viewed as owning the intermediate-term (i.e., four to six weeks) outlook.

A rally target at 1820.40 remains my minimum upside objective for the near term. Progress toward that number is negligible Sunday night, and 'camo' entry opportunities even on the two-minute chart hard to find.  If you're feeling up to the task, however, I'd suggest sticking with the two-minute, focusing on a dense cluster of 'external' peaks from Friday for leverage. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

The futures took a running start at last week's highs on Friday but couldn't break through. We should expect it this week, though, pending some news item or economic statistic sufficient to touch off a short-squeeze.  A 1385.25 rally target will remain in effect in the meantime, although the three-tick overshoot of its 1367.75 midpoint sibling was not enough for us to infer that it's a done deal. Shortly before 10 p.m. EST, there were no promising handholds for night owls looking for a trade, even on the two-minute chart. However, adroit camouflageurs might want to try their chops at 1359.00, the retracement target of the pattern shown. ______ UPDATE (9:41 a.m. EST): The futures have fallen moderately to a so-far low of 1353.25 so far this morning. The weakness might be said to have been foretold by our inability to find a way to get long via  'camouflage'.  A new downside target lies at 1348.25 (60m, A=1365.00, B=1355.25, C=1358.00 and p=1353.00, the exact low so far.  You can bottom-fish at 1348.25 with a 3-tick stop-loss. _______ FURTHER UPDATE (10:24 A.M. EST): Cancel the trade, since the bounce from the exact midpoint of the pattern has exceeded its point 'C'.  FYI,  even on the one-minute chart, following the turn from 1353.00, I could find no way in via camouflage.

With talk of a $100 billion Facebook IPO in the air, frenzied  investors should ponder the legal and public relations difficulties that a far more experienced and financially successful company is having expanding its own advertising-based business model. Last week, 26 states filed suit against Google over new search-engine policies that could further compromise the  privacy of users. This would be in sharp contrast to the image Google has carefully cultivated of a company that zealously guards privacy rights. In reality, the search-engine giant would continue to expand its data collection methods to ferret out every fact about each of us that could conceivably be of value to advertisers.  And of course, this capability becomes literally boundless in Android-based phones, since they allow Google to track not only one’s browsing history and habits, but also to map a permanent record of the stores, restaurants and other locations that one might visit over the course of a lifetime. Facebook desperately wants in on this action, since its revenues so far amount to only a small fraction of what Google has been raking in. Under the circumstances, and with a reported 850 million pairs of user eyeballs to monetize, it is a given that Facebook’s data-mining methods will grow more aggressive and intrusive over time.  So far, though, the company hasn’t even scratched subscribers’ figurative corneas.  Would you believe the company doesn't yet have a model for phone-based advertising?  That's because the ads themselves – ads designed like those that currently pop up on Facebook pages – would lose their impact if downsized for cell-phone screens. Docile Shoppers An even bigger problem for Facebook’s ambitious 800-pound-gorilla-of-a-business model is that more and more firms are finding increasingly sophisticated – if not to say, insidious – ways to hit us with advertisers’ messages, including

Yesterday's thrust failed by a hair to surpass the 554.92 peak recorded on February 2, but bulls look capable of handling it, probably today or Monday. Regardless, a 567.31 rally target obtains for the near term, and a move to it became an odds-on bet when the HUI blasted out of the consolidation pattern highlighted in the chart.  We'll take the measure of buyers' mettle again after we've seen how well they handle hidden resistance at 567.31.