Thursday, June 18, 2009

I've suggested nibbling on some QQQ puts this morning so that we've got a horse if and when stocks bolt from the gate. You should never short a quiet tape, as the saying goes, but some lessons are just too boring to take to heart.  Meanwhile, have you noticed how the financial charts look like they're breaking down out of a wedge? Considering that Goldman's been our bellwether, this seems ominous.

A Hidden Pivot support at _____ (see chart) can serve as our minimum downside projection for today. It looks so run-of-the-mill, however, and it's so close to the May 28 low, that I wouldn't risk more than three ticks attempting to bottom-fish there. Alternatively, the futures would need to pop to _____ to shake the blues that have dogged buyers this week.

We waited in vain yesterday for the mood change that would have made the day even remotely interesting. Instead, the broad averages spent the day scratching little sores, so to speak, creating in the process a six-hour stretch of airless tedium for bulls and bears alike. Although we found relatively few trading opportunities worth sharing with subscribers, there were reasons to think it will be bears who come out ahead on the next move. Way ahead. Why so? Besides the obvious reason - that all bear rallies must end eventually - there is the psychological one that we discern in our own desire, of late, to get ourselves good and short on some giddy spike. Haven't you been feeling the same way?  It almost seems as though everyone is waiting for that last, brainless head-fake, eager to get short at prices juicier than those that may have obtained on the previous day's close.  Instead, Mr. Market has delivered little more than a series of opening-hour grunts - hardly the kind of spikes that bring exhilaration and instant profits in their wake.  Tsunami Scenario For what it's worth, we can recall several instances in the past, during otherwise quiet summers, when a slow, steady erosion of prices gave way to a precipitous collapse that caught Wall Street with its pants down.  And that is why we are telling subscribers to remain alert to the possibility of moderate selling that gathers tsunami-like power as the day wears on. We have a hunch the day will begin, not with a well-accustomed flurry of uninspired buying at the opening, but with a gap lower that draws in the those who have been accumulating shares on dips. One of these days, we suspect, they are going to experience the kind of dip that will recall what

It's been a coon's age since IBM created a bearish impulse leg on the daily chart, but it would happen today if the stock touches 105.10.

A Hidden Pivot support that has been a more than a month in coming looks like a good place to attempt bottom-fishing today if the futures ease lower.  The pivot lies at 51.37, and you can use a stop-loss as tight as 51.24.

We tend to overtrade and over-analyze bullion in the chat room, but if you meditate for a moment on the August futures' daily chart, you'll see that there's not much going on.  In fact, gold is trading almost exactly where it was back in February, notwithstanding some less-than-mellow ups and downs in the interim.  My gut feeling is that bullion quotes could hang out for quite  while longer -- and I don't mean for just a few more weeks -- before they blast off for outers space. In that regard, gold is not a particularly good trading vehicle in comparison to other tradable issues that have been trending strongly, such as bonds, currencies and crude.  My suggestion to anyone too wrapped up in bullion's hourly price movements would be to get out and see the world, in a manner of speaking.  Otherwise, you're liable to start imagining things.    

We usually seek to get short at the 'D' targets or midpoints of rallies, but just to have a piece of the action if shares should plunge, let's bid speculatively for a very small put position in this vehicle.  Bid 0.84 for two August 33 puts (QAVTG), good for the first 10 minutes of the session, and bid 0.81 for two more, good for the remainder of the day.