July 2012

Notice that bellwether Apple did not come along for the ride yesterday, much less energize it. This has possible consequences for the broad averages that I've spelled out in the Apple tout.  The tout also contains a novel way to get long in AAPL that is explained visually in the accompanying chart.

A rampaging stock market appears to have left Apple behind. This is akin to leaving one's canteen and jerry can in the garage when embarking on a drive into the desert.  The broad averages will not get very far without Apple, and if it resists their upward pull for yet another day or two, look for Apple to win the tug-of-war.  From a technical standpoint, the stock looks like it will need to chop around for at least another day or two before making up its tiny mind about the next big move. In the meantime, we can treat the island-gap low at 587.71 (see inset) as we would an external peak.  Thus, any B-C- pullback from just above it would be usable for a camouflage entry from the long side. ______ UPDATE (August 1, 1:48 a.m. EDT): AAPL is in the throes of a vicious short squeeze, having rallied $40 in mere days.  Technically speaking, the move will become more than a mere vendetta if and when it surpasses the external peak at 620.25 that that I've labeled in the new chart. Because that would have bullish implications for the stock market as a whole, I've set a screen alert to warn me if buyers should get close.______ UPDATE (August 9, 11:53 p.m.):  The stock's pop earlier this week to 625.00 was unambiguously bullish -- not just for Apple but for U.S. stock averages.  Now, the stock could pull back to as low as 600.25 without generating even a mildly bearish signal. _______ UPDATE (August 14, 11:20 a.m. EDT): AAPL is approaching a high-probability rally target that would complete a pattern more than two months in the making. The target is 637.71, and it can be found on the 15-minute chart as follows: A=549.50 (6/4), B=617.22 (7/10) and C=570.00

It is on days like yesterday that we get a finely calibrated sense of how unfathomably stupid are the forces that move the markets.  Draghi said the central bank would do whatever it takes to defend the euro-zone, and the markets took flight.  Does anyone actually believe that quantitative easing will rescue the region that, in the throes of deepening recession, is sliding toward bankruptcy? No matter.  Corporate earnings took a back seat to Obama-style "hope and change," triggering a short-covering rampage in the euro and in stocks around the world. From a technical standpoint the move in the euro was strongly impulsive on the hourly chart, and so any weakness in the days ahead should be viewed as prelude to a follow-through bull leg.  We'll watch closely to see how that second leg interacts with the 'p' midpoint of a pattern like the one shown. Traders should stay tuned, since I will put out an intraday alert if a low-risk opportunity to get short should develop. To receive such alerts, you need only check the E-Mail Notifications box on the My Account page.  Want to learn how to nail swing highs and lows yourself? Click here for details about next week’s Hidden Pivot Webinar.

Check out the daily chart if you think yesterday's 212-point blast was somehow significant. Yet one more hump in the making?  So it would seem.  If there is anything interesting about the series of gratuitous ups and downs going back to late May, it is that the current rally seems so likely to be the up-slope of yet another. Then again, maybe not.  Expectations can be dangerous in this game, the moreso if they verge on certitude. Contrarians can instantly see the challenge of second-guessing this particular move: Will it gut and disembowel those who go short just above mid-July's peak? Or will the rally reverse so sharply from just below it that even the bears who thought they were ready will be caught with their pants down? For my part, I'll continue to monitor impulse legs on the lesser charts so that I might better answer those questions and others. I'm also sticking with the minimum upside projection given here yesterday, 1378.25; or perhaps 1383.50 if any higher.  Both numbers can be shorted aggressively with tight stops or via camouflage.  _______ UPDATE:  Shorting the higher target would have worked out beautifully, since, even if it had been stopped as tightly as 1.00 point, the trade would have held.  On that basis, half the position needed to have been covered at 1380.50 on the 5-point pullback to 1378.00 that ensued.  Subsequent chop created a marginal new high at 1385.00 and a close at 1382.50. Under the circumstances, there was little reason to take the position home over the weekend, since it would be subject to the depradations of the usual arse-bandits, broad-tossers, child-molesters, goniffs, coprophagists and thimble-riggers who pray on Sunday nights' light-but-often-desperate traffic. A stop-loss

Rep. Ron Paul’s bill to subject the Fed to broad audits sailed through the U.S. House of Representatives yesterday; now it goes to the Senate, where it is certain to die. Those who believe that Democrats and Republics are fundamentally indistinguishable should ponder the bill’s fate when November rolls around.  While it’s true that Paul’s Federal Reserve Transparency Act drew bipartisan support in the House, garnering the votes of more than three dozen Democrats, Senate Democrats can be expected to take a harder line.  If and when they kill the measure, it will probably be the last time for a very long while that anyone in Congress seriously challenges the Fed’s right to withhold the truth and to answer to no one but its lords and master on Wall Street. For his part, Helicopter Ben Bernanke seems so confident that the Senate will uphold the status quo that he did not even speak out against HR 1207. Appearing before a House panel last week, he was Mr. Cool, sounding like he’d been scripted by Goebbels himself:   “We are quite transparent and accountable on monetary policy,” the Fed chairman testified. “Besides our statement, besides our testimonies, we issue minutes after three weeks. We have quarterly projections, I give a press conference four times a year, there’s quite a bit of information provided to help Congress evaluate monetary policy as well as the public.” Pure Bull Yeah, sure: “Quite a bit of information.”  All of it pure bull. Friends of the Fed have argued that airing the full details of, for one, the banking bailout would damage the financial position of the firms involved and destabilize the economy.  True enough. But if you pile their lies and secrets high enough, the whole, rotten system is eventually going to collapse anyway.   “An audit

One reason I think gold will soon come under renewed pressure is that the dollar appears to be consolidating for a nearly 2% rally to 85.16, a major Hidden Pivot resistance (see inset).  Notice how the top of an earlier rally that culminated on July 12 stalled precisely at 'D', giving way to the brief recharging that has sent DXY above it. It's impossible to say how long the correction will last, assuming it is one, but so far the pullback hasn't been sharp enough for us to pronounce the recent high a bull trap.  That would change if there's a nasty selloff in the next day or two, but otherwise we should infer that bulls are raring to go.

For all of its wicked shakedowns, feints and swoons, Apple hasn't generated a bearish impulse leg on the daily chart since April, and its tumble this week is still nearly $10 shy of that threshold. At worst it looks like a duel between buyers and sellers, and so we'll let them duke it our for perhaps 4-7 days before we reconsider some low-risk directional plays using calendar spreads either well above or below the market.  My gut feeling is that it will be a long time -- perhaps 12-18 months -- before the stock exceeds the all-time high at 644.

September Silver looks positively leaden, with an ostensible C-D follow-through leg that has been meandering across the hourly chart for nearly a month.  If it breaks out, Gold will be pulling it, but camouflageurs can nonetheless use the bullish impulsiveness of the pattern I've highlighted to get long. A timed buy-stop would be the next best way to do it, and your odds will probably be most favorable late at night, when a lack of liquidity could conceivably help this vehicle get from 'X' to 'p' quickly.

The bull trade recommended in the wee hours last night would have worked nicely using a 'timed buy-stop' as advised. I am not tracking it, however, because there were no reported fills in the chat room. Be that as it may, and notwithstanding the fact that August Gold has just poked above round-number resistance at $1600, I am mildly skeptical of the rally because it has yet to 'go impulsive' on charts above the level of intraday. I've provided some further explanation for my outlook in an interview I did yesterday with Al Korelin. For now, though, a rally target at 1657.90 can be used as a minimum upside objective. Getting there should be a piece of cake once the futures have closed above the authoritative trendline shown in the inset. (Note: Camouflageurs can try leveraging the breakout on the lesser charts.) However, please note that it will take a bit more than 1657.90 -- specifically, a thrust exceeding 1674.30 --  to get past the first true 'external' peak on the daily chart. Receive a free trial subscription by clicking here.