For day traders, leveraging the stock market’s breathtaking volatility of late has probably seemed like skiing the steeps at Crested Butte: one mistake and you’re dead, or wishing you were dead. Who could have predicted the Dow Industrials would one day gyrate so wildly that even 2,000-point swings would not be technically significant? You can see why in the chart below. From a Hidden Pivot perspective, the Indoos would have to rally above peak #1, or fall beneath low #2, to suggest that something serious is happening. Anything less, including the back-to-back 500-point declines we have just witnessed, is just noise. (Click on chart to enlarge) Investors can only pray that a whole slew of thousand-point selloffs don’t bunch up in the same quarter, since at that rate it would take just two months to bring the Dow down to Bob Prechter’s famous bear market target at 400. We think Prechter will eventually be right, but it could take years if the stock market’s rabid ups and downs continue to more or less cancel each other out. To be sure, bulls have been getting the worst of it for a year. But they should consider themselves blessed over the last month or so, since the broad averages have been marking time even as the economy slipped deeper into an abyss that in some ways is worse than the Great Depression. The Pinnacle of Affluence But worse for denial? It’s hard to know, since the evidence suggests that even in 1932, many Americans didn’t realize they were living through times so tough that they would come to be known as the Great Depression. The Okies knew, though, and so did those who lined up for soup. But this time around, the economy may have to fall quite a bit farther before
Friday, November 7, 2008
QQQQ Nasdaq 100 Trust (30.73)
– Posted in: Current Touts Free Rick's PicksWe hold four December 36 calls (QQQLJ) for 0.75, having been unable to short November 36 calls against them at anything remotely approaching fat price. Let's shoot instead for a lean price that would be realistic in the event of a moderate short squeeze: Offer four November 36 calls (QQQKJ) short for 0.20, day order. If we succeed, we'll have legged into a bullish calendar spread with little risk in either direction.
December Silver (10.040)
– Posted in: Current Touts Free Rick's PicksYesterday's sharp break put December Silver on course for a decline to 9.750, but if that midpoint pivot is swept aside, look for the selling to continue down to as low as 9.305 over the near term. Alternatively, the first glimmer of hope would come on a print at 10.145, a tick above an "internal" peak visible on the 5-minute chart. _______ UPDATE (8:12 a.m. EST): After a night of gratuitous jacking around, there was immediate jeopardy to as low as 9.345. The midpoint sibling of this pivot is 9.820, and if it is decisively breached, the lower number would become an odds-on bet. These targets will remain viable as long as 10.295 is not exceeded to the upside.
December Gold (738.00)
– Posted in: Current Touts Free Rick's PicksThe nasty dive into yesterday's close projects to at least 721.00, but if the futures slip beneath that Hidden Pivot support, we could expect them to continue down to at least 704.10. The target can be bottom-fished with a stop-loss of less than $1, but it will be less risky to attempt it if 704.10 is hit overnight. _______ UPDATE (8:25 a.m. EST): Gold has turned higher without having reached the 721.00 downside target identified above. This would ordinarily be a bullish sign, except that in this case the reversal has not created an impulse leg on the hourly. Also, the "premature" bounce may have been due, not to Hidden Pivots, but to the visually obvious support of lows near $722 recorded earlier in the week. While the futures show little inclination to fall to new lows (i.e., 704.10), neither do they seem eager to complete rallies to their 'D' targets. This appears to be true in all time frames, down to the little stuff.
