Goldman still looks like it has the voltage to reach 112.31, a Hidden Pivot target broached here earlier. We’ll want to attempt shorting the stock when it gets there, but in the meantime one of the cheapest ways to catch a ride north would be to leg into a calendar spread at the 115 strike. I’d prefer owning May or June options against Aprils sold short, but it appears that neither of those two months is available. We’ll use July calls instead, bidding 6.00 for the spread two times. This price would be a very good deal — too good a deal, probably, to be filled on a spread order. But if I can see a way to leg into the spread today, long side first, I’ll disseminate instructions in the chat room.
From the monthly archives:
March 2009
Some chartists calculate ABCD patterns in the way shown, but I have found the targets of such patterns to be less reliable, and therefore less useful, than the ones we typically use. Even so, as a way of predicting how far this bear rally might go, the ‘D’ in the chart, 8107.59, is worth considering. That mutant Hidden Pivot, incidentally, is 20 points above the 0.618 line of the decline from early January’s high.
My minimum upside target for the near term is still 771.75, or 778.00 if any higher. (For the June contract, the equivalent numbers are 769.00 and 774.25.) The futures would need to do a little better, however, touching 786.75 today or tomorrow, to affirm that the week-old push from 672.00 is not just the fleeting, reflexive bounce that we suspect it is. Please note as well that the correction would need to go quite a bit higher, touching 837.00 (833.00, basis June), merely to retrace 0.618 of the 2009 bear begun from 943 in early January; and to 794.00 (790.75, basis June) to retrace just the second phase of the decline, from 861.25 . That last number would become my minimum upside objective if the Hidden Pivot at 778.00 is exceeded. Alternatively, if the futures fall hard this week, the first important hidden support comes in at 704.50 (702.00, basis June), although there might be lesser supports where we could attempt to bottom-fish with relatively little risk.
On the hourly chart, Gold’s impulsive declines continue to show more power than the rallies. For instance, although last Tuesday’s low exceeded a key bottom at 891.90 recorded a month earlier, the rally since has so far failed to answer this sign of weakness with a correspondingly strong upthrust. That would have required a push touching 964.10, whereas the actual high, 941.10, fell $23 shy. That peak remains the number to beat this week, but any less would indicate that sellers still have the upper hand. If weakness holds way today, the first place where we might look for a bounce is 913.90, a midpoint support with a ‘D’ target sibling at 886.70.
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Joining a national trend, local governments here in fiscally conservative Colorado have taken a meat axe to their budgets in order to bring spending in line with plummeting sales tax revenues. Broomfield, for one, has just cut outlays by $12.2 million, or five percent, postponing dozens of construction projects and instituting a hiring freeze. Boulder has sliced $3.6 million from this year’s budget and is preparing to trim millions more, since the local business picture is continuing to deteriorate rapidly. (Every resident knows it, too, because of the relentless shuttering of big stores in the relatively new Twenty-Ninth Street mall.) Lafayette is in somewhat better shape, having initiated layoffs at the beginning of 2009 in anticipation of a drop of at least 10 percent in sales taxes revenue. Meanwhile, my hometown of Superior is preparing a contingency budget, having » Read the full article
Study the chart closely, because it would take me a thousand words to explain all that is going on here. What do we notice first? This: The first bearish impulse leg to form on the daily chart since January occurred earlier this week with Tuesday’s slight penetration of an earlier low from February 9 at 891.90. This down-leg looks pretty docile, though, since it lasted all of three days and reversed without breaching two more “external” lows that look like they should have been dead meat. So what of it? Well, for one, it could set up a nice buying opportunity at 904.40 today or Monday, provided the point ‘C’ high endures. The 904.40 target, a Hidden Pivot midpoint, also has analytical value, since its decisive breach would imply more weakness to as low as 877.20 over the near term. The only other point to make is that a rally today above ‘C’ could create trouble, since, applying the two-peaks rule (note: 964.00 is not a peak), it would mean that the uptrend would need to keep going, exceeding 1007.70, to create a bullish impulse leg to negate the ”docile” A-B bear impulse mentioned above (and shown in the chart). The foregoing was not intended to make much sense to Hidden Pivot novices, but I hope that I’ve spelled things out clearly enough to help experienced Pivoteers dance an impressive samba in the chat room if they are called upon. (And if their feet are very nimble indeed, they’ll be able to find camouflage for a long entry with-the-trend if the futures don’t accommodate with a dip to 904.)
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We came within 0.05 points yesterday of hitting the exact low, enabling longs to get on board ahead of a powerful rally. Let’s give it another whirl today, bottom-fishing two ticks above a promising Hidden Pivot support at 45.13, stop 45.04. I’d suggest using the April 45 calls (TBTDS), which should be selling for around 2.80 by then. If it had been possible to use a limit order for the calls, I would have deisgnated this as a Pick of the Day trade, since the purpose of such trades is to make you money on autopilot.
AIG Traders: Hang ‘Em High!
by Rick Ackerman on March 17, 2009 3:09 am GMT · 8 comments
Not since Ronald Reagan fired more than 11,000 air traffic controllers in 1981 has the White House dived headlong into a mundane pay dispute. This time, though, it is Mr. Obama who is taking on the workers, and he could not have picked a more unsympathetic bunch. We are referring, of course, to the AIG traders who were gifted with $165 million in bonuses even though their employer is into the Federal government for $180 billion in rescue loans and commitments. From what we’ve read about AIG, their trading desk was not exactly a profit center when the financial system began to unravel. Far from it. But that evidently didn’t stop the company from honoring one of the most hallowed traditions of the financial world – i.e., rewarding employees extravagantly for failure. Why would they do such a stupid thing? If a banker were to answer that question honestly, we know what he would say (recalling bank robber Willie Sutton): Because the money was there.