Tuesday, April 14, 2009

I gather from the chat room discussion yesterday that tous le monde took the recommended trade, buying eight ______ puts for an average 0.58. There is no urgency about spreading off these little pups, nor should we get nervous if Microcrap tacks higher on rumors that Windows 7 is not quite as crappy as Vista. In any event, our goal will be to leg into vertical put spreads if the stock falls hard in the coming weeks; or if it falls only moderately

I mentioned elsewhere today that we might have to adjust our sights upward for this this vehicle if Goldman Sachs shares are about to shoot up 10 percent, to $140. I doubt that the Dow would keep pace, implying a move up to around 8900, but there is a Hidden Pivot resistance at ____ that can serve as a minimum upside objective if the Goldman-inspired wilding spree catches on.

I usually try to comment on trading vehicles that have been garnering their fair share of discussion in the chat room, but there isn't much to say about June Crude right now. It has been trending higher since mid-February, and there is a rally target of sorts at 59.92 that can serve as a minimum upside objective.  While that would eclipse an important peak  at 59.66 recorded at the very beginning of 2009, it would fall shy of a second at 61.33 whose defeat is needed to create a bullish impulse leg on the daily chart.  Bottom line, Crude's tedious noodling since Christmas has the look of distribution rather than consolidation. A pop to 61.34 would radically change the picture, but for the time being, and unless 59.66 is exceeded to the upside,  the official bear market target will be 30.85, or 26.17 if any lower.

Yesterday's rally was constructive, since it exceeded a small peak on the hourly chart at 899.50 recorded on the way down last week. However, because Gold has squandered numerous opportunities of this sort in recent weeks, we'll set a high bar to tell us whether the uptrend begun last Monday is capable of renewing itself with each bullish thrust.

The _____ rally target we've been using remains appealing as ever, and you can still short there with a stop-loss as tight as a single point. ( If you're fortunate enough to be reversing a long position when ES gets there, you can widen the stop to 2.50 points.) The first hint that the bullish target might no be reached would come on a fall to ______.

Okay. Everyone seems to have picked up on the easy-as-pie Microsoft trade, buying October 13 puts as recommended.  This gambit has the potential to pay for your subscription, and that's why I offered it. But might I also suggest that you take an interest in Goldman Sachs?  The stock has been yielding up trades that have not only been highly profitable, but very nearly riskless.  The little s.o.b. has started to grow on me, really, and as long as it continues to be, well, fun, and as long as we've got the stock nailed, why not come along for the ride?

Anyone who wants to know what's on the stock market's evil little mind need only monitor the behavior of one stock: Goldman Sachs [NYSE Symbol: GS].  These days, Goldman is the high-beta vessel of whatever madness appears to rule at a given moment. As such, it's often possible to predict the stock market's histrionics based on Goldman's crazed leadership. Yesterday morning, for instance, we were expecting the stock to shoot up to 131.80  - about $8 above last week's settlement  price - and to drag the stock market along with it. In a trading tout disseminated to subscribers late Sunday night, here's what we foresaw:  "[Last week's $10 finishing stroke] was a short-squeeze truly worthy of the name, since it came on news that Goldman Sachs plans to float a zillion new shares while the gettin's good. We hesitate to predict how high the squeeze will go, especially with index futures evidently under pressure Sunday night.  But our hunch is that stocks will get dragged higher by Goldman rather than the other way around.  If so, look for the rally to continue to at least 131.80, a good place to try shorting on your terms with a tight stop-loss."  New Rally Targets We didn't get the short off because GS peaked yesterday at 131.27, a tad below our target. However, earlier in the session, when Goldman pulled back a bit, we put out a bulletin recommending that subscribers add some bullish call spreads to an existing option position. Specifically, we advised buying the April 130-135 vertical spread for 1.60. (We already owned the spread a few times for an average 0.36.)  We have been expanding our option position for the last few weeks, trying to build a profitable edge across a wide price range. As of yesterday, with a position that