November 2012

What I didn't mention about IBM in today's commentary is that if the stock does fall to the 176.77 target or perhaps even slightly lower, it will do some very heavy technical damage to the weekly chart. Pivoteers may have noticed that that would refresh the chart's bearish impulsiveness by taking out at least two important 'external' lows.  At that point, evidence in this bellwether stock of the gestation of a larger bear market would be overwhelming -- not to mention, a dark cloud over the holiday shopping season.  Camouflageurs should look to short the move on a rally back up to 187.38, the p of the pattern.

I've let my imagination run wild in the Microsoft tout featured at the top of today's list. And although my worst-case target near $11 may seem farfetched, a 20% drop over the near term, to around $22, appears highly likely. Check it out.

Microsoft's swift 10% plunge recently prompted someone in the chat room to note that it cannot be good for the market as a whole. Agreed, although from a technical standpoint it should be noted that the stock could fall a further 10%, to 24.30, without negating the bullish impulse leg that ended with early March's peak at 32.95. My strong hunch is that MSFT is headed down to at least the 22.05 midpoint support of the big pattern shown. That pivot is tied to a 'D' target a 11.10(!),which at this point seems farfetched. Nevertheless, and as far as I'm concerned, Windows 8 has the potential to be the biggest disaster in the company's history -- a product that would seem to hold no appeal whatsoever for business users, let alone a reason to upgrade from Windows 7. We shall see. In the meantime, we should endeavor to catch a ride south from the top of the next rally, since the subsequent downdraft could be a 20-percenter for shorts. Given Microsoft's huge cash hoard, acquiring shares below $20 would be like buying dollar bills at half-price. Is there a possibility that the company's spare tens of billions are parked in an unsafe place?  If so, the epiphany awaits that will reveal the $2 trillion surplus held by U.S. corporations to have been as ephemeral as our banking system's alleged reserves. [This just in: A ComputerWorld article calls Windows8 a "strategic mistake," and a "Jekyll and Hyde operating system that is weak on tablets, terrible on PCs."  Click here.]

For gold investors, first the bad news – and let us be clear up front: it’s not really that bad.  Notice in the Comex chart below that the price of gold has been meandering within a pennant formation for more than a year. You don’t have to be a technician to see that this could comfortably continue for some time – well into 2014, perhaps – before the converging lines of the pennant will narrow sufficiently to force gold to “escape” either up or down. You can relax about which direction is the more likely, since the pattern so far looks like a classic consolidation, tipping the odds toward a breakout rather than a breakdown. However, our own proprietary tools (a.k.a. Hidden Pivot Analysis) suggest that it could be a while before the excitement begins.  This is implied by December Gold’s failure in October to surpass an important  peak at $1802 peak recorded seven months earlier, in March of 2012. Had the recent rally exceeded that peak, it would have created a bullish “impulse leg” of weekly-chart degree, clearing a path to at least $1976.  Alas, the rally chickened out just five points shy of impulsiveness, casting gold into corrective purgatory for an indefinite spell. A Rare Opportunity So what would it take to hasten bullion’s northbound exit from the pennant?  Here the news is good, for it would require nothing more than a measly $5 thrust that is uncorrected between 1798 and 1803.  Moreover, according to our technical runes, the thrust would not have to exceed the third peak at $1823 to signal a breakout with sufficient power to reach $1976 over the near term.  In fact, those familiar with our “camouflage” trading technique could conceivably be handed a rare opportunity to board with risk very tightly controlled if

From James Howard Kunstler's Clusterfuck Nation: He's surely in for a rough ride in the four years ahead. There is a sickening, heavy sense of foreboding about the seemingly endless financial melodrama. It leads to the bewildering fork in the road at which the split paths lead to two different ways of going broke: savage deflation or turbo-inflation. Either way, you're toast. The gross interventions and arrant accounting fraud that pervade global finance, both in government and in private banking, can only lead to perversity and dysfunction in the operations of money that we depend on to remain civilized.

With bankers, teachers and other public employees taking a well-deserved and much needed three-day holiday due to Veteran's Day, Wall Street marked time yesterday. Among the few stocks that did move -- nicely, as far as we were concerned -- was Facebook, which paradoxically may be responding to more-sincere overtures from the same dirtbags who goosed it on October 24.

We hold eight December 40-45 call spreads for free -- and a good thing, too, since I'm at the point of averting my eyes lest this stock, with its by-now gratuitous feints above $40, annoy me any more than it already has. Yesterday's dirge pointed down to at least 38.72, but any lower could turn recent, important lows at 38.40, 37.39 and 36.33 magnetic. Despite all this, the weekly chart is struggling to make hay with an indisputably bullish impulse leg (A=36.33 on 9/28; B=40.91 on 10/5) that projects to 41.97 -- 67 cents above the recent high. Please note, however, that it would be quite bearish if a negative impulse is generated without that target having been reached. For that to occur, the stock would need to fall uncorrected past 'externals' at 37.39 and 36.33. _______ UPDATE (November 15, 9:55 p.m. EST): Yesterday's nasty slide was the death knell for our bull spread, which fortunately cost us nothing. Both of the 'externals' noted above were breached, leaving us hoping that whatever rally lies ahead will be easily shortable.  If we can't make money being long this stock, then we might as well go with the flow. ________ UPDATE (December 5, 9:36 p.m. EST): When it hit 35.84, the stock signaled more downside to as low as 31.20. It'll have a last chance to turn around from 34.29, the midpoint support; or from just beneath November 16's 34.78 low, where some stops are likely to get run. _______ UPDATE (12:25 p.m. EST):  The next day, the stock made its turn from -- surprise, surprise -- 34.79, embarking on a manic tear to 38.42 that with today's plunge is starting to look like just another bull trap. This stock has been such an annoying little piece of crap that perhaps the

Georges van Hoegaerden, CEO of The Venture Company, is an out-of-the-box thinker whose e-mails are both provocative and enlightening.  His latest, which bears the headline above, refracts a theme that will be near and dear to the hearts of some who frequent the Rick's Picks forum.  A quote from Goethe contains the essence of it: None are more hopelessly enslaved than those who falsely believe they are free. – Goethe To read the full essay, click here.

[Monday's constipated price action changed nothing that was addressed in the commentary below. Perhaps with Veteran's Day, a national holiday not observed on Wall Street, behind us,  the markets will reveal a bit more about their post-election, pre-holiday mood as the week unfolds. RA] The broad averages and some bellwether stocks that we track achieved some important correction targets very precisely on Friday. Now, however, shares will have to rally robustly from the lows to avoid a further, possibly nasty drop into year’s end. A week ago, we used Hidden Pivot Analysis to drum-roll a potentially important low in Google at 650.69. On Friday, the stock bottomed at 650.30, just 39 cents beneath our target, then trampolined $18.  The powerful rally from exactly where we’d expected is a tentatively bullish sign. However, if GOOG should relapse beneath the support even slightly, more downside to at least 605.83 would become likely, according to our proprietary technical method. If this does indeed occur, the sooner it happens, the more bearish the implication would be for the remainder of 2012.  Because Google is so heavily owned by institutions and carries such heft in the Nasdaq index, any weakness in the stock could drag everything else down with it. We should mention that the S&Ps did almost exactly the same thing last week as GOOG.  With the E-Mini S&Ps having traded as high as 1431.75 a few days earlier, we projected a swoon from 1408.00 to at least 1364.25 -- a plunge equivalent to about 350 Dow points. This is in fact what occurred, just after we told subscribers to get  short at 1399.25. The actual low at 1363.50 on Friday came at 8:10 a.m. EST, about 80 minutes before the opening bell. The futures subsequently catapulted to an intraday high of 1388.00 before