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COMMENTARY for Friday
TODAY'S ACTION for Friday
Rick's Picks for Friday
The downside target I identified in today’s commentary is shown in the chart, with an AB impulse leg that looks pretty kosher. The actual target lies at 809.75, and it sibling midpoint at 834.25 has already been breached. Even so, and as you can see, it wouldn’t take much of a rally to negate the point ‘C’ high of the downtrend. Given Microsoft’s short-squeeze reaction to the non-news after the close concerning earnings, it’s hard to predict what the market’s mood will be when stocks begin to trade on Friday. If the E-Mini S&P heads higher, though, and it looks comfortably supported by an 858.00 midpoint (currently resistance), we should infer more upside potential over the near term to as high as 892.75.
The Hidden Pivot target at 910.30 stopped yesterday’s rally cold, but the weak selloffthat has followed hints that Gold is about to get second wind. There is no mistaking the importance of the 911.80 high that the June futures will need to surpass in order to turbocharge the hourly chart, and any progress above it, particularly a weekly close above it, would be very good news for gold bulls. Rather than speculate any further, we’ll let the action dictate the outlook. Most immediately, though, the futures looked primed for a thrust to 920.10, subject to resistance from its sibling midpoint, 911.20. If buyers can push past that midpoint, the 911.80 resistance will be a dead duck. FYI, there are no compelling Hidden Pivots we can use to project a downside target, but 894.90 seems logical, since it represents a 50% retracement of the rally leg begun from 879.50 on April 21.
We hold four October 13 puts @ 0.58, and the market could not be less kindly toward them, since Microsoft has been buoyant at a time when option volatilities have collapsed. Still, October is a long way off, and I doubt that the software giant’s fabulous earnings news — i.e., that it met Street estimates by laying off a whole bunch of workers — will propel this rally very far. Sit tight for now, and keep in mind that our goal will be to spread off our modest premium risk when the stock turns weak. _______ UPDATE: Our puts are a distant longshot at this point, although October is a lonnnnng way off. _______ FURTHER UPDATE: We continue to hold four puts, but we’ll write them off for a $240 trading loss, since odds of a payoff have grown remote.
We’re playing with the house’s money in this stock, since we made a nice chunk of change leveraging low-risk calendar spreads tied to the April expiration. This time I’d like to short the little flying pig, probably by buying some way-out-of-the-money put calendar spreads at the peak of the stock’s next rally. That could occur at 128.92, my minimum upside projection for the near term; or at 144.27 if any higher. We’ll want to short 128.92 with a tight stop in any event, but it behooves us to find an entry strategy to capture the implied $6 rally in the meantime. There was decent “camouflage” on the hourly chart to have done so at 119.95 yesterday, but having missed the opportunity, we’ll simply have to wait for the next. FYI, the rally target associated wtih 119.95 is 125.17.
I would have expected the great earnings news earlier this week to get Apple to its target near $130 more quickly, but it appears that the broad averages have been weighing the stock down. There are two Hidden Pivot rally targets we can use for now: 129.05; or if any higher, 132.85. Scalpers can play with them but I am not recommending laying out shorts aggressively in either spot, since there are better stocks to short than this market leader.
SLW left our stingy bid choking on dust yesterday, but there is still an easy way in for any pivoteer up to using the camouflage so nicely provided by the chart shown. I cannot predict how the pattern will develop, but I’ve labeled the two known price points, AB, plus a hypothetical entry price to show you what I’m talking about. I’d appreciate it if chat room denizens who understand the mechanical logic of this trade would share it with less experienced traders this morning.
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Gold, Crude Oil Hit Their Marks
by Rick Ackerman on April 24, 2009 12:01 am GMT · 3 comments
Yesterday’s trade recommendations scored two dead-center bullseyes, each calling a rally top within a single tick. In Gold, we were looking for the June Comex contract to leap sharply to 910.30. When the dust had settled, the futures had traded as high as 910.40, the peak of an $18 rally. Although the high fell just shy of the 911.90 print needed to refresh the bullish trend, it seemed a foregone conclusion the futures would get there, and soon, since they were maintaining altitude in after-hours trading following a weak pullback from the intraday peak. Comex Junes were an opportune short sale for day traders glued to the 910.30 target; now, however, if they continue rising to at least 911.90 as we expect, bears had better run for cover. A more detailed forecast appears in tonight’s touts section, so check it out. » Read the full article