July 2012

Within a bigger picture that remains bearish for the intermediate term, the daily chart is brain-dead, and anything shy of 1675 should be regarded as mere noise. However, the short-term outlook would brighten cosiderably on a print today exceeding 1610.70.  Camouflageurs could attempt a long entry on a b-c pullback from lower, however -- from between peaks #1 and #2, or #2 and #3.  Want to learn how to do this stuff yourself? Click here for a free trial subscription to Rick’s Picks.

December Corn's chart suggests a potentially important top here, the end of a parabolic rally.  If so, perhaps it portends milder summer weather ahead for the U.S..  Check out the chart if you want to see the evidence graphically.

The hottest, driest, crop killing-est summer since, practically, the Big Bang has sent corn prices into a parabola.  Is rain and cooler weather in the cards?  Could be.  Look at the accompanying chart and you'll see that, from a Hidden Pivot perspective, this is a logical spot for the bull run to sputter out.  Accordingly, camouflageurs are encouraged to short this monster using downtrending abc patterns on charts of 5-minute degree or less.  If you fill and survive for a full day, please let me know in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (July 20, 2:08 a.m. EDT): Buyers tore through a major top on the  weekly chart yesterday, suggesting either that the harvest may be too far gone to save, or that continuing hot weather will further damage crops.  I've refreshed the chart to show the extent of the technical damage.

On Friday, Rick appeared on the Korelin Economics Report. In Rick's segment, the topic of discussion was the precious metals markets and where Rick believes they are headed. The audio for the interview may be heard here,while the transcript of the interview is reproduced below. Al Korelin: Hey, welcome in. You’re listening to a daily editorial on the Korelin Economics Report. I’m Al Korelin. I appreciate you joining me. I’ve got Rick Ackerman on the line with me. By the way, this audio is being produced exclusively for our friends at Kitco. It’s been a while since we’ve been there. It’s just about two or three days I guess that we’ve been remiss. But boy, it has been busy, busy, busy. I have a listener by the name of Bart who wrote a couple of e-mails yesterday regarding his pessimism about the precious metals markets right now. He doesn’t feel it’s a good place to be. My personal opinion is, long term, I think it is. That’s from a fundamental perspective. But Rick, I sent you one of the comments. You said, “Whoever this guy is, he knows what the hell he is talking about.” Can you comment on that please? Rick Ackerman: Well, partly because I agree with him, Al. I think that the weight of the evidence, technically speaking, is bearish. I look at these gold charts, and we’ve got August gold Comex closing up around $1567. But I can’t see it escaping a further dip down to just below $1500. $1497 is my minimum target. But at that point, the chart would look even worse. But the point that he makes is that you’ve got to wait and see, really. Certain things can happen. I’m always open-minded to being contradicted or to changing my mind, at least.

Using the 646.94 rally target shown, let's try to lay in some September 650-August 650 calendar spreads, paying $5.00 apiece for four of them.  This spread was do-able Friday if you paid the offer for the Seps (13.00) and sold the Auggies for a tad more than the bid (7.90).  We may be able to improve on the price by legging into the spread. This would entail buying the Seps when the stock is trading down near a minor correction target, or alternatively, shorting the Auggies when Apple is hitting a minor rally target. But for now, just to get a feel for these calls, we'll work this gambit as a spread order. _______ UPDATE (July 20, 2:48 a.m. EDT): With the stock moving higher, the spread has widened and is now trading for around 6.20.  We can do better, but it looks like it will require some work. Stay tuned for a trading signal, presumably at a swing high or low that will allow us to leg into the spread. The latter is what we'll probably use, since shorting the Auggies at a minor rally top would leave us naked short calls.  Risk could be very tightly controlled nonetheless, but margin requirements would be exorbitant.

Because the strength or weakness of the dollar is absolutely crucial to so many other things we watch, I urge you to check out the DXY tout included with today's selections. The chart  accompanying my analysis shows that this vehicle is within striking distance of a rally target that has been more than four months in coming.  Also, please note that today's Apple tout is actionable via a particular calendar spread that I have recommended for purchase.  Click here for a free trial that will allow you to view analysis available only to paying subscribers.

The Dollar Index is closing on an important target at 85.16 that can tell us whether it's about to go into a prolonged correction.  An easy move past the Hidden Pivot would imply that even larger, bullish patterns will continue to drive this vehicle to eventual highs above 90.  However, if bulls are about to get waylaid by a correction of perhaps three weeks or longer, DXY will either stall precisely at the pivot and drop back sharply, or plummet without having reached it at all. The latter scenario would be more bearish, but in any case we should minor DXY's progress toward 85.16 in the days ahead, since it is a most crucial threshold.

A slightly altered picture (see inset) has brought a crucial midpoint resistance down a point to 1353.00, but the implication is the same: If it is exceeded on a closing basis, the futures will be signaling an imminent surge to as high as 1386.25, its 'D' sibling. Please note that Friday's stall precisely at p confirms the target itself as well as the likelihood of its being reached if and when p has been decisively bettered.  ______ UPDATE (July 16, 7:44 p.m. EDT): No change. It'll still take a close above 1353.00 to trigger off another big rally.

There's a bigger, bullish  pattern at work that goes back to early June's lows, but the one we should focus on for now projects to 13,003.  Its point 'B' high is legitimately impulsive, and that's why it makes sense to treat it respectfully. Notice that Friday's close was 30 points above the p midpoint. That's probably enough to ensure further progress toward the 'D' target, but if today's settlement is even further above p, that would all but clinch the move. Traders can short this move by buying four DIA September 126 puts if and when the underlying vehicle gets within 0.15 points of 129.51., the equivalent target. ______ UPDATE (July 16, 7:40 p.m.):  Yesterday's gratuitous chop has left my forecast and advice unchanged. _______ UPDATE (July 23): Last week's top at 12978 got us close enough to the target that we were able to short DIA by buying September 126 puts.  The broad averages have plummeted 400 points since, allowing us to take a partial profit on the puts, effectively reducing the cost-basis on those we still hold to less than 0.50 per. (They traded as high as 3.95 this morning.)