November 2013

The Indoos took out our last major rally target, at 15890, with such ease that they must be presumed capable of reaching the 17056 objective shown -- a BIG number whose provenance goes all the way back to 1995. We shouldn't expect this Hidden Pivot to work precisely, because there's a second point 'C' low in the middle of the pattern, but it should do just fine as a minimum upside objective. The smaller ABC rally at the tail end has a p midpoint at 16087 that was missed by 57 points on the last thrust. However, this failure would not become explicitly bearish unless the Dow were to dive below 14551 without having reached p. For now, however, 16087 can serve as a minimum upside objective for the near term. DJIA  16087 p

No question, whatever the stock market has been butting up against this week is heavy. Even AAPL has lost its usual friskiness, retreating into the shallow wallow that has contained it for nearly a month (see inset).  The stock's last upthrust missed the Hidden Pivot target shown by $3, but the resistance hardly seems daunting enough for us to infer that the Great Bull has breathed its last. No way. But until such time as AAPL gets back in gear, providing the kind of market leadership that only an established world-beater can provide, neither the high-fliers nor the broad averages are going anywhere.

Today's tout for the Junior Gold Miner ETF offers a slender reed of hope for those who think three years of bear-market torture is enough. Unfortunately, and technically speaking, it could get worse. Much worse, However, it wouldn't take much of a rally to turn this vehicle's daily chart at least speculatively bullish.  If you want to offer up a prayer, see the tout for details.

I wish I could bring you better news, since, for the last three years, this once-popular gold vehicle has been beaten worse than a harp seal during mating season. The chart (see inset) suggests it is hanging on for dear life at a 36.56 midpoint support that has been breached, although not yet decisively.  It is tied to a 'D' target at  18.56, implying the stock's price could be cut in half yet again before this bear market has run its course.  If you'd like to offer up a prayer, ask that the stock turn up from here, surpassing 37.38 without taking a breather.  That would be enough to turn the daily chart speculatively bullish. _______ UPDATE (December 4 at 12:39 a.m. EST): The 28.47 target looks compelling enough to be bought aggressively. If and when the stock gets within a dime of that Hidden Pivot, which it will, buy twelve December 13 (weekly) calls, 30-strike, no stop. Pennies count here, so work hard at getting a good price.  Your edge lies in knowing precisely where the stock is likely to turn. _______ UPDATE (December 9, 12:05 a.m.):  The target still looks buy-able, but I'll suggest shifting to the December 21 (monthly) 30-strike calls. With the stock trading near 28.47 today, a price of about 0.45 for the calls would be excellent. Please let me know in the chat room if you fill the order, since I'll likely recommend a stop-loss 0.15 below the average price reported.  Note as well that GDXJ is likely to continue falling to 26.79 if the stop is hit. (60-min, A=32.87 on 11/29). _______ UPDATE (December 12 at 10:04 a.m. EST): The stock has aborted the rally and relapsed to within inches of the 28.47 target. The target is still valid in theory, but I

Yesterday's price action was puzzling, although that doesn't necessarily make it worthy of serious reflection. Usually I get a hit off red/green patterns displayed by my Tradestation 'radar' screen. But amidst Monday's flatulence, my home-grown indicator was all over the place. The usual bunch of high-fliers got whomped for most of the session, eventually dragging the broad averages down with them. Someone in the chat room said that a statement made by Icahn tanked the market late in the day, but I seriously doubt that the stock market much cared what he had to say. My guess is that it was all about rotating money from dot-com stocks into the Dow. Even buzzards grow tired of eating the same offal every day. In any event, the 1816.75 rally target proffered here yesterday is still in play, and your best ride for catching a ride to it may lie in bottom-fishing the 1784.00 p midpoint or, using camouflage (because it coincides with a key low), the 1777.25 d target of the pattern (see inset). The pattern's crisp, single-bar coordinates suggest that you may be able to dispense with camouflage at p if trading only a single contract, and that a stop-loss as tight as three ticks would suffice. Note that an alternative ABC pattern that I've highlighted targets 1808.25, with a p sibling at 1792.75. The pattern is so clear and compelling that I would surmise that the S&Ps are in at least minor trouble if it is not reached straightaway. But the futures would likely have to close above the 1792.75 midpoint resistance to be ready to frolic on Wednesday. On re-reading the above, it is so convoluted that I'm going to suggest that you simply study the chart and draw your own conclusions, trading them as you see fit.

In recent months, DaBoyz have seemingly lost their nerve (and verve) for moving stocks higher at night, although they don't seem to have any problem shaking them down on whatever mote of news in the wee hours might be construed by those prone to panic as even faintly bearish.  This is the behavior of a bull that is no longer young, frisky and filled with confidence, but rather, one that is mature, cautious and methodical.

Today's touts include a very bullish target for the S&P 500 Index. However, the futures show more immediate resistance at the 1816.75 target shown. Nimble traders can try shorting there with a tight stop on Monday, but because the A-B impulse leg is somewhat gnarly, camouflage is suggested. If there's an opportunity to get long for the ride up, you can use any profits thereof to cushion the stop on the short reversal.

The weekly chart of the S&P 500 offers a compelling case for a melt-up before year's end to 1905, six percent above current levels.  Notice the very precise stall at the midpoint pivot (red line) on the first attempt to get past it. This not only validates the pattern itself, but also adds to the likelihood that the target will be reached now that the midpoint has been obliterated. Traders should adopt an aggressively bullish stance until the target is reached.  They should also treat a pullback to 1641 (green line) as a gift, since it would offer an excellent opportunity to get long belatedly for a potential last-gasp surge to 1905.

In last week’s commentary, we opined that Twitter’s shamelessly overhyped IPO was the bell that’s supposed to ring when the stock market is at a major top. But that was before we’d heard of Evan Spiegel, a 29-year-old Stanford dropout who has single-handedly one-upped Twitter in three separate categories:  greed, hubris and stupidity.  It’s not what Spiegel did, but rather what he didn’t do, that tells us that stock-market mania may be at  an epochal high. In case you missed the story, which ran above the fold in The Wall Street Journal last Thursday, Spiegel snubbed a $3 billion offer from Facebook for the company he founded, Snapchat.  You say you’ve never heard of them?  But then, why would you have?  The software firm makes a smartphone application that is used almost exclusively by teenagers to send messages and pictures to each other that disappear in ten seconds or less. Don’t you wish you were the genius who’d thought of this first?  (Question: Can the idea be adapted by a company that packages meals for dieters?) If you’re wondering where Snapchat’s profits will come from, you’re not alone.  Spiegel himself has yet to figure that one out.  Indeed, the company has no revenues, nor even a business model. But because there have been hundreds of millions of Snapchat messages flying hither and thither in cyberspace each day, that is deemed reason enough for the company to be in play as a red-hot buyout candidate.  Snapchat reportedly has suitors in China who are willing to invest at a level that would effectively value the company at $4 billion. But will even that be enough to satisfy Spiegel’s flamboyant brand of greed?  Perhaps not. He evidently thinks Snapchat’s user numbers have plenty more room to grow, and that the current, high levels