January 2013

The ambitious 1494.50 rally target shown looks like a lock-up, given the gap through its p midpoint sibling at 1438.50 on Wednesday. Since all price action that has occurred since is presumptive consolidation, we should look for our camouflage entry opportunity at the midpoint support -- or possibly the D target -- of any lesser corrective patterns that occurs today or Monday. I'd suggest focusing on the three-minute chart, which at this moment is developing an abcd pattern with a 1450.25 midpoint and a D target at 1445.50 (a=1460.50 on Jan 3 at 1:54 p.m. EST; b=1450.00 on Jan 3 at 3:39 p.m.) ______ UPDATE (January 7 at 12:41 a.m. EST): Late Sunday night, the futures were entering their fourth day of a tedious consolidation.  Our trading bias is bullish, and I would suggest using the 15-minute chart to find an impulsive rally worth buying.  Camouflageurs can drop down to the three-minute chart in search of a smaller pattern with an 'x' entry trigger, but make sure that the larger pattern (i.e., on the '15') meets the single-bar rule.

[The guest commentary below is the second we’ve published from James Tolard, an old and dear friend as well as a supremely gifted commodity trader.  Jim’s style is to surf the big trends, trading just a few times a year. He lives in a rural area outside of Paris, but we’ve coaxed him out of semi-retirement to write occasionally on an eclectic range of subjects suited to his deep intellect, worldliness and wit. This time, he is sharply at odds with our own, very bearish outlook for 2013. We have no qualms about sharing his thoughts with you, however, because Jim’s against-the-grain instincts have been right far more often than our own. RA] One of the things that baffled me all summer, and into the stench of the campaign finale, was the supposedly odd “friendliness”' of the U.S. stock market and the weakness of the dollar.  I was fairly bullish on stocks going into October, for a surge to – sit down for this -- Dow 20,000!  But as October pulled in with a screech, and elections just a month away, I am old enough to have expected little good from either the Ides of March or those of October. So, I blushed, backed off, and decided to let the market tell me what kind of correction or sell-off it might need. Now, contrary to all emotional expectations, we are facing the real possibility that a strong run-up may well launch in the coming weeks. So, assuming that I am going to be right, what do I use to support my arguments? First is the low borrowing rate. While the normal person or even smallish business cannot borrow 3% or less, large firms can. The banks are still re-building their reserves and doctoring their balance sheets, so they are holding

The Dow was in the throes of a 300-point surge when we looked in on it during this session, and bullion was up sharply as well. Naturally, our focus was on getting a piece of the action, and we did so with results that will be of particular interest to those interested in sharpening their camouflage-entry technique.

Google has $19 of running room before it reaches the 742.15 midpoint resistance of the pattern shown. That can serve as our minimum upside target for now as well as a rationale for getting long via camouflage.  I'd suggest using a 15-minute chart or less to identify an opportune pattern, but making entry on a chart of even lesser degree.  You could also try to short the midpoint, but keep in mind that any significant progress above it would augur more upside to its 'D' sibling at 848.29.  _______ UPDATE (January 7, 1:23 a.m. EST): Google has rallied $18, peaking just 68 cents from the 742.15 target flagged above.  We'll stipulate that the stock close above it for two consecutive days before we infer that a follow-through to 848.29 is nigh

We continue to hold four Jan 590-600-610 butterflies @ 0.20. Our maximum loss on the position is limited to $80 plus commissions, while a theoretical gain of as much $4000 is possible if Apple is trading around $600 on January 18 when the options expire. Meanwhile, powerful as yesterday's short-squeeze was, the peak of the opening bar failed by 21 cents to surpass a key external peak at 555.20 recorded on December 7. The stock seems likely to get past it on a second or perhaps third attempt, but the fact that it couldn't do it the first time is reason enough to not get our hopes too high about a quick move to $600. In any event, do nothing further for now. _____ UPDATE (January 10, 1 a.m. EST):  The 21-cent failure noted above proved telling, since the stock has dropped $40, or about 7 percent, since then.  Our butterflies are headed toward worthlessness, implying a loss of about $100 including commissions. _______ UPDATE (January 14 at 8:17 a.m. EST): I haven't touted Apple as a bellwether in a while, but the stock's weakness is clearly a drag on the market this morning. In pre-dawn trading, on word that the company has cut back on iPhone5 parts orders due to weaker-than-expected demand, the stock has traded down to $500. This is nearly $20 beneath the 519.33 midpoint pivot of a pattern that projects to 447.55. This target was first identified in Rick's Picks more than a month and is strongly affirmed by today's price action. _______ UPDATE (January 15 at 11:50 p.m. EST): Although the 447.55 target that I've billboarded in my commentary and in the chat room remains viable, there's an alternative Hidden Pivot support of lesser degree where bulls could attempt to regain traction. It lies at 461.64,

Since today's guest commentary concerns the seemingly absurd prospect of a Dow rally to 20,000, I thought it might be a good time for me to at least pretend such a thing is possible. As it of course is.  Technically speaking it's simply a matter of looking at the E-Mini S&P's chart the way I'd look at Gold's -- which is to say, with as a bullish bias that I can justify based on hard evidence.  There are two things to notice in that regard. First, the rally from purple A to B is genuinely impulsive, having exceeded an important external high at 1459.75 recorded in December 2007 (albeit by just 2.00 points). Second, the 1461.75 high recorded in mid-September exceeded a clear 'D' target at 1422.25 (green line) by a whopping 39.50 points. Moreover, a significant portion of the price action since then has occurred above the D target, suggesting it's a consolidation. Even for someone who expects the economy to tank in 2013, as I do, there is no evading the bullish implications of the facts cited above.  Most immediately, the logic of it suggests we'll see new all-time highs near 1553.50 in the weeks ahead. That would represent a rally of about 7% from these levels. Notice that the 1443.75 midpoint resistance (purple p) of that pattern has already been decisively breached by about 14 points. Much as I'd like to say we can go back to being bearish now that we've at least considered the bullish case, we are in fact obliged by the evidence to be bullish.  If there's any hope I can hold out to permabears, it is that a high at 1553.50 -- representing a headline breakout, by 34 points, above the 2007 top -- could in theory set up one of the

The chart accompanying today's E-Mini S&P tout is one of the most important I've published, since it has forced me to acknowledge, despite my strong belief that 2013 will usher in a deep recession, that stocks could go significantly higher over the near term.  While I've posed two alternative scenarios that will at least give permabears something to hope for, it still seems very likely, technically speaking, that the broad averages will hit new all-time highs before the bear comes a-roaring.  Click here to sample Rick’s Picks free for a week, including daily trading ‘touts’ and access to a market-savvy chat room that goes round-the-clock.

Someone posted an $1158 target for gold in the chat room, attributing it to Martin Armstrong.  Over time, I've lost a clear sense of whether the guy has been right more often than wrong, which is the basis on which all forecasters should be judged. However, the seven-year stretch Armstrong did in prison for what many believe to have been trumped-up securities-fraud charges seems to have given his credibility a more or less permanent boost.  After looking at gold's long-term charts myself, I find no basis for predicting such a severe drop in the price of gold in 2013 -- one amounting to a 62% correction of the rally begun in October 2008 from 728.  What I see is a lazy consolidation that could continue for quite some time, perhaps into 2014, without exceeding the range 1500-1800.  That said, an impulsive, unpaused thrust breaching lows #1 and #2 (see inset) would lend weight to Armstrong's scenario.  Perhaps he has a crystal ball?  We don't, however, and until such time as we see some strongly bearish impulse legs develop on the daily chart, we'll stick with a forecast that is only moderately bearish at worst for the intermediate term.  _______ UPDATE (January 4 at 1:23 p.m. EST):  With this morning's dump, the futures appear bound for 1606.40.  The midpoint sibling of that 'D' target, already exceeded by a whopping $24,  lies at 1650.90, and so we should view any rally to that threshold as short-able, albeit via camouflage.

Friday's whipped-up hysteria failed to surpass even a single prior peak on the hourly chart, let alone the two we require to generate a bullish impulse leg. This is bearish on its face, but we shouldn't presume to know how DaBoyz will work the crowd on 2013's opening day, especially since the political eddies, currents and riptides are beyond predicting.  My hunch is that, as the unpredictables grow less newsworthy, the focus will increasingly be on an economy about to turn leaden under the massive weight of Obamacare, significantly higher payroll taxes and the end of the dead-cat bounce in housing.