July 2012

Silver is somewhat lagging Gold, which has turned rambunctious early Wednesday morning.  Regardless, your best opportunity to get long could come following a B-C pullback from just above the 27.085 'external' peak shown.  You may not have much time to squeeze off the shot, but that's the point: The more quickly the opportunity passes, the more likely it will be to produce a winning trade.  A 'timed buy-stop' entry is probably the only way to go, so this trade is for the nimble only.

At around 3:30 a.m. EDT, Gold futures were acting like something was up.  The move may be over by sunrise, but I've sketched out a possible long entry for night owls nonetheless.  This information is very time-sensitive, and that's why I've shouted it with exclamation point in the headline.

Shortly after 3 a.m., Gold was on the move.  The rally looked impressive on the one-minute bar chart, but viewed on the '15' (see inset), it was merely one impulse leg among a few too many that have failed.  Still, night owls reading this tout are advised to attempt entry using a 'timed' buy-stop, since the rally may have the moxie to forge higher even though that is what everyone is probably expecting by now. The 15-minute chart should do ya for camouflage, perhaps using the still incomplete pattern shown.

Yeah, I know I kissed off Apple in today's commentary, what with the thrashing it's receiving in after-hours trading. Still, I'd be remiss not to feature the 595.86 midpoint support of the savory pattern shown.  Apple believers will of course have a great opportunity to turn things around there -- and we, to get long using call options.  Accordingly, if and when the stock gets within 17 cents of p, buy two August 640 calls.  This is a shoot-from-the-hip strategy, but I hesitate to have you do it the easy way, buying shares, since 200 of them will set you back more than a hundred grand.  Stop yourself out of the calls if the stock trades 595.64 or lower. _______ UPDATE (11:16 a.m. EDT):  Where to begin?  For starters, the 595.86 midpoint had already been obliterated when this tout went up, although it wasn't evident on the regular-hours chart that was the source of my hallucination. Then there was my reference in today's commentary to a Sep 640-Aug 640 call spread that I was canceling; in fact, it was the 650 strike that had been recommended. And so on, and so forth. Perhaps I haven't been getting enough sleep? In any case, my apologies for any confusion I may have sown.  Also, for what it's worth and notwithstanding the fact that Apple has fallen $50 from its July peak, the stock's daily chart has yet to see the creation of a bearish impulse leg.

Apple, the mother of all bellwether stocks, has taken a flying dive Tuesday night on news that Q2 earnings were merely sensational  (i.e., up a little more than 20 percent). Presumably unaware that Samsung’s excellent smart phones have been breathing down iPhone’s neck, speculators were evidently caught unawares when Apple’s earnings report included the peevish detail that iPhone sales had slowed markedly.  The ubiquitous product has accounted for most of Apple’s revenues in the last few quarters, so even a mild slowdown was bound to stampede pass-line bettors.  So, because of Apple’s bellwether status, does the stock’s apparent failure to soar to new highs on this latest earnings report portend tough times for the market as a whole?  Very probably, yes.  Without Apple to pull shares higher this summer, don’t expect them to make much headway.  Regarding Apple itself,  although we’d told subscribers earlier to buy the Sep 650 – August 650 call spread for $5 as a relatively low-risk bull play, because of the way the stock is acting this evening, we’ve recommended that the order be canceled. Meanwhile, Rick’s Picks subscribers who followed last week’s advice to short the market are enjoying what has been a painful decline for most investors.  One of two trades that caught the precise top of the so-far mini-avalanche was the result of a challenge we issued to subscribers back in May to pick the perfect spot to short the Mother of All Bear Rallies. Permabear that we are, we have been top-picking for years (and also trading the rallies. Of course), never expecting to catch the actual Summit. Our goal, repeatedly, has been to get short at “a” top rather than The Top, and to make a few bucks even if we are wrong.  And if we are right? This time, perhaps?

The immediate picture is not quite as bad as the 13.90 target given here a while back, but GDXJ could still fall hard in the days and weeks ahead in search of traction. For a technical snapshot that gives the bullish case as well, check out today's tout and chart.

Bulls and bears are struggling for the soul of this vehicle, using the 18.90 midpoint pivot shown as a fulcrum (see inset).  Based on the pattern, GDXJ seems likely to fall to at least 15.62, its 'D' target. Alternatively, it would take an upthrust exceeding 19.52 to put buyers back on the aggressive.

We're trying to buy the September 650-August 650 call spread for 5.00 -- a low-risk bull play on our favorite bellwether stock. The spread settled Monday at 5.85, but there may be a chance to leg it on at a better price if we buy the Seps when the stock is carving out a swing low (see inset).  I'll signal intraday if such an opportunity should arise, but you'll need to check the 'E-mail notifications' box on your My Account page if you want to receive it in timely fashion.  In the meantime, continue to bid 5.00 for the spread. _______ UPDATE (5:48 p.m.):  Cancel the spread order.  Apple is getting pasted in after-hours trading -- down as much as $40, to a low of $565 -- after announcing earnings that most other companies would envy.  It would seem that iPhone sales have fallen off significantly, presumably because the company has a formidable challenger in Samsung (and may have another if Nokia ever emerges from coma).  I'll update with a fresh tout and chart, since Apple is a key bellwether for the stock market as a whole.

Using trailing stops disseminated in the chat room, 'Crusty Buttocks' has closed out half  of a short position entered near the recent top at 65.26.  His profits on the trade amount to $431 so far, effectively raising the cost basis of the shares we are still short to 67.41. His last post in the chat room advised a 65.26 stop-loss, but you should stay tuned intraday in case he adjusts the stop.  FYI, if this vehicle falls to a midpoint support on the weekly chart that's equivalent to the one at 1301.25 that I've flagged in the E-Mini S&P, it's bound for a minimum 61.51 (see inset).  _______ UPDATE (July 25, 3:11 a.m. EDT):  In an update from Crusty posted Tuesday morning in the chat room, he has kept 200 shares -- half tied to a 65.26 stop-loss, the other half stopped at 67.64. His cost basis for the short is 67.41, making it very hard to lose. _______ UPDATE (July 26, 10:19 p.m. EDT):  Looks like Mr. Buttocks is holding a winning ticket, even if it turns out that the top he shorted was not the ever-elusive Major Top. Even after yesterday's ferocious rally against his position, he's still up $800 on paper.  Not bad for being "wrong"!  _______ UPDATE (July 30): With the market in the throes of a vicious rally, Crusty exited the last 25% of the short position on a 65.26 stop-loss. This he duly announced in the chat room at 9:37 a.m.  His actual reported profit on the trade was $500.  As of August 7, the QQQs appeared bound for a possible top -- tradable via camouflage, in any case -- at 67.07.