Tuesday, October 14, 2008

The 877.00 rally target given here yesterday unfortunately was accurate, the futures having gone no higher intraday than 875.00. Is that all for now? We'll reserve judgment, on the chance that the December contract will pop above 876.40 today. That would create a mildly encouraging impulse leg on the lesser charts (see inset). Otherwise, on weakness we should look to buy down around 806.50, a midpoint pivot that comes from the weekly chart. (A=999.40, July 18).

This vehicle appears to be popular in the chat room, so let's put it in play. It has been flouncing around a very important midpoint Hidden Pivot support at 26.48, but because that number comes from the weekly chart, we should allow for the so-far 1.80 overshoot. That would be bearish if it had occurred in a chart of lesser degree, but on the 'weekly' it could conceivably come to mediate a consolidation range that is relevant to the long-term trend. Regardless, we shouldn't simply jump in and buy call options willy-nilly; instead, let's use the 806.50 target in December Comex Gold to get long. If and when the future trade within $2 (or so) of that price, bid for four December 29 calls (GBJLC). The spread on these calls is absurd -- 0.75 on Monday's closing marks -- so don't even think about paying the offer; wait for the calls to come to the bid, or perhaps step in front of the bid by 0.05 or 0.10. And don't worry if you miss the trade, since I'll be featuring this vehicle more often in the days and weeks to come. _______ UPDATE: Shelve the order for the time being, since GDX is too strong today for lazy buying. We may have to chase it, which implies buying at the midpoint of a minor c-d correction.

It's shortly before midnight in the East, and the futures remain in Romper Room mode, up as much as 33 points at their peak, 1050.00. The print at that number created a very real impulse leg on the intraday charts, so short sellers shouldn't look for respite early in the session if at all. Pullbacks have been too shallow for a Hidden Pivot handhold, but if you put a gun to my head and said, "Predict!" I'd probably tell you, "1072.00, at least," and run like hell. _______ UPDATE: Today's short-squeeze was much less freakish than yesterday's, pushing the Dow to a relatively modest, 400-point gain in the opening minutes of the day. The E-Mini S&P made it as high as 1067.00 -- the apex a 55-point rally that fell five points shy of our target.

Since I may have doomed Apple a week ago with a target in the mid-$70s, it would hardly be sporting to ignore this rally. It looks bound for a minimum 115.91, but a close above that Hidden Pivot would hint of more bear-baiting to as high as 122.02. It is at that pivot that we should try to get short; however, this trade would not be for beginners, since naked-shorting some fat-n-juicy November 125 calls (APVKE) would be the way to go. They could be trading for anywhere between $11-$12 when the stock gets to 122, so you'll have to monitor the bids and offers for the call as the target is approached to know exactly how to offer them. _______ UPDATE: Apple peaked a tad above the first target, then dove. We'll have more chances to short it, though, since the stock's rally off its recent, grossly oversold lows looks like just a warm-up on the weekly chart.