Monday, August 24, 2009

Opportunity beckons, since the Diamonds are closing on a Hidden Pivot resistance at 95.82 that looks likely to cause a stall. Buy two September 95 puts (DAVUQ) if and when the stock gets there. I estimate they'll be selling for around 1.76 if you want to park a limit order with your broker, but you may be able to improve on that price by tracking the option bid/offer as the stock nears the target. _______ UPDATE (10:51 a.m. EDT): This one is working nicely so far, since the Diamonds have rallied to 95.81, a penny from the target, and the September 95 puts traded down to 1.75, a penny below where I'd suggested bidding. Officially, then, we hold two puts for 1.75. Use a fairly tight stop-loss for now at 96.07. FURTHER UPDATE (1:52 p.m.): Lower the stop-loss to 95.55 for the rest of the day, and at the same time offer two September 92 puts short for 1.40. The order is good as long as you hold the September 95 puts.

If Goldman falls without having bettered Friday's 164.90 high, you can bottom-fish a midpoint support at _____ with a stop-loss as tight as 15 cents. If the stop is hit, odds of a more serious correction to as low as 156.61 would shorten.

Gold was flagging lower Sunday night after Friday's spirited thrust, but buyers weren't giving up much ground. The so-far low of the pullback is 952.20, and if it holds, the futures could put bears on the ropes by vaulting a Hidden Pivot midpoint at _____ . That would suggest more immediate upside to at least _____. 

A Hidden Pivot target at 1027.50 first noted here on August 14 looks relevant at the moment, since Friday's high at 1026.75 came within three ticks of it. One above that number, however -- a prospect that is not exactly a longshot bet in this never-ending bear rally -- the next likely stop would be 1046.00, a target that comes from the daily chart (where A= 772.75, March 30). More immediately, a lesser target at1034.00 can be shorted by scalpers with a 1.25-point stop-loss provided it's hit in the first hour and 1020.50 hasn't been exceeded to the downside first. _______ UPDATE (10:56 a.m. EDT):  The futures have made a precarious top at 1034.25 exactly 57 minutes into the session.  If you shorted at my number, stick with the 1.25-point stop-loss that was given.

The long-bond futures look like they could continue to do nothing for more weeks or even months. On the daily chart, the last time they created a bullish impulse legs was two months ago, in late June. Since then. however, bullish and bearish feints have canceled each other out, suggesting that indecisiveness is likely to rule for the foreseeable future.  A pop this week exceeding _____ would change that, turning the picture bullish immediately, but I am certainly not expecting it.

(In the years leading up to the dot-com boom, I freelanced an investment column to the Sunday San Francisco Examiner. Following is one of my favorites. It tells how Louie Piro, my barber when I lived in Mountain View, became a multimillionaire by investing his spare cash - amounting to all of $5 a week - in promising companies when he started cutting hair in the 1950s. Louie was still cutting hair long after he could have retired, but his weekend getaways were anything but ho-hum: marlin fishing in Cabo, golfing in Las Vegas and Hawaii, and casino junkets to Atlantic City. RA) If there is a single word to sum up the success of investor Louis Piro, that word is "dull."  Piro has never made a killing on a stock.  He doesn't play hunches and he runs from hot tips.  He says he passed up Pfizer not long ago because its shares were too pricey even before impotent men started flocking to their Viagra pill for a cure.     Nor will Piro sell anything from his portfolio.  He just keeps buying -- and then only with money he knows he won't need any time soon.  He adds stock whenever the price drops substantially. Piro shuns companies that sell products or services he can't understand, and he has never even owned a share of a Silicon Valley upstart. His favorite word -- "dividend" -- could be the mantra of a successful hypnotist.  Zzzzzzzz.  Finally there is this pearl, the cliché that underlies nearly every investment decision that Louis Piro has made in the last 45 years:  "Buy shares in companies that will grow with America." 'Build a Little Nest Egg' That Piro, 63, could have amassed considerable riches by following such homely rules is probably not unusual.  What is striking,

Anyone who bought the 11.31 downside target given here on Friday would have caught a strong bounce from within a penny of the intraday low. Some partial profit-taking was in order, but if you still hold a position, you should be using a stop-loss that will take you out of it with no loss or a small gain.  UNG's violent relapse just before the close hints of more trouble to come, which could mean  slippage to as low as _____.  More immediately, though, there are two Hidden Pivots associated with a lesser pattern that could brake DXY's fall at either 11.26 or _____.   Alternatively, DXY would need to touch _____ today to suggest that Friday's bounce was more than a fleeting reaction. 

At Friday's beaten-down lows, the Dollar Index still had a ways to go before hitting the downside target at 76.58 given here earlier. Keep in mind that if the support fails, that would grease the skids down to as low as 72.93, the 'D' target of a larger pattern.