The futures would need to pop to 948.60 this week to turn the daily chart bullish, but 918.00 would do the trick on the hourly. More immediately, in trading early Tuesday night, a minor rally with potential to around 896.00 was developing. However, it would take a little more than that — specifically, a print at 897.10– to turn the lesser charts positive. That would exceed by a tick a subtle look-to-the-left peak made on the way down Tuesday. The peak occurred at around 7:45 a.m. EDT and is visible on the 5-minute chart. ______ UPDATE: Gold’s gratuitous spasms have become too stupid to watch, and so I will avert my eyes for a while.
From the monthly archives:
April 2009
Before yesterday’s moderate selloff, we were looking for the Indoos to complete a minor rally pattern to 8343, a Hidden Pivot target. The target remains valid because the point ‘C’ of the pattern, 7751, is very much intact. Moreover, we might also infer that the finishing stroke to 8343 is likely, since the midpoint resistance associated with that number, 8047, was demolished when the Dow shot up to 8113 on Monday. All of this is shown in the accompanying chart. However, we can use the corrective pattern from Monday’s top to judge whether the bull may be waning. It projects to 7841, and if that Hidden Pivot support is breached Monday morning it would be a sign of more weakness to come.
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On yesterday’s closing marks, our option position was showing a theoretical profit of $1,180, but there is another $1070 of potential gains over the next two days if the stock finishes the week at 115. The profit would even higher — around $2,680 — with GS at $120. You can exit between now and Friday, but officially, and unless stated otherwise in an intraday bulletin, we’ll close out the position just before the April calls expire. There is no reason to try and squeeze the last dime of profit from this trade, since it will be a certain winner over a very wide range of prices; however, you should keep in mind that a haphazard exit could cost you $300 or more of otherwise easy gains. A well-managed exit implies closing out both sides of each calendar spread more or less simultaneously and on prices that lie about midway between the spread bid and offer. Thus, if you are offering the July 120 calls on the high side of the bid/asked spread, when the order is filled you should cover the short side by buying two April 120 calls on the offer. Here is the position we hold and which was built over time: long two July 115-April 115 call spreads @ 6.00; long two July 120-April 120 call spreads @ 9.80; long four April 130-135 call spreads @ 1.03; and short an extra April 115 call for 1.40. That last price incorporates a loss we took on some April 85-90 put spreads.
Recommended reading: Goldman Sachs Backlash is Picking Up Steam
I gather from the chat room discussion yesterday that tous le monde took the recommended trade, buying eight October 13 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, legging on some calendar spreads by shorting nearer-term puts at the 13 strike. If we go “vertical,” it would be by shorting October 10 or October 11 puts for as much as we paid for the October 13s. And if we put on the calendar spread, it would entail recouping at least 0.58 of premium by shorting, in monthly succession, May 13 puts, June 13 puts, July 13 puts, August 13 puts and Sep 13 puts. If we can’t recoup at least 0.58 per put in the process, we should be ready to hang it up and try, maybe, Dancing with the Stars.
I mentioned elsewhere here 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, above $140. I doubt the Dow would keep pace, implying a move up to around 8900, but there is a Hidden Pivot resistance at 8569 that can serve as a minimum upside objective if a Goldman-inspired wilding spree really catches on. Pivoteers please note: The pattern that yields the target is an attractive one, since the ‘B’ terminus of the impulse leg is not a “sausage B”; indeed, it surpassed a subtle peak to the left recorded in February.
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 such opportunities 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. For now, that would imply a push today or tomorrow exceeding 911.80– or for good measure, 917.90.
Goldman Madness, Part II
by Rick Ackerman on April 15, 2009 12:01 am GMT · 4 comments
No sooner do we crown Goldman Sachs our Bear Rally King than…THWUMP!…the stock gets socked with a $15 loss, its worst day in recent memory. There were some lurid stories on the Web to help turn yesterday’s selloff into a gang-bang, including one at SeekingAlpha.com that wondered aloud whether Goldman deserved to share in AIG’s bailout booty if, as is rumored, Goldman made a ton of money shorting AIG stock before the » Read the full article