Our memory stumbles whenever we try to recall any recent sightings of “green shoots” that would support the officially promoted illusion of a U.S. economy in recovery. Actually, this vision is more of a hallucination than an illusion, since one’s mind needs to venture beyond the pale of rationality, light years beyond the fringe of statistical evidence, to conjure up supposed signs of sustainable growth. Does “recovery” square with the reality that you, personally, see all around you? Indeed, whatever picture the government and the news media want us to see will be unconvincing at best, since a » Read the full article
The update to yesterday’s forecast caught the top of an entirely unremarkable session that was all noise and zero conviction. If and when this trading vehicle breaks out, look for confirmation of a 1097.50 rally target by way of a stall at 1074.50, its midpoint sibling. Alternatively, it would take a print at 1057.25 to turn the hourly chart bearish.
I’ll stick with the 1029.10 rally target flagged in yesterday’ s update, although a leisurely buy on a pullback to the 1012.70 midpoint associated with that number does not appear to be forthcoming. The print at 1029.10 would be a big deal, since, as noted here earlier, it would surpass a high at 1028.00 from July of 2008, refreshing the bullish impulse on the weekly chart. That high is no less relevant because it occurred in thin trading, by the way. To the contrary, it is all the more legitimate as an “external” peak because it was recorded by the December futures, not by a continuous contract.
There are no DJIA patterns that I particularly like, but the whimsical rule-breaker shown in the chart will do in a pinch. I’ve decided to legitimize it because of the oscillations around the 9290 midpoint pivot, and also because the most recent phase of bear-rally hysteria launched from a low not far beneath it. Anyway, the bottom line is a Hidden Pivot target at 10493. Although I wouldn’t try to go short the world at that price, I’m pretty confident about using it as the first number above 10000 where I might believe a top could form. One thing we can be nearly certain of is that 10000 itself will show no particular stopping power. If such an occurrence were even remotely possible, the stock market would cease to be the engaging carnival that it is. At 10493, however, Dow 11000 would be a glimmer in bulls’ eyes — and Kudlow’s wet dream.
With a rally target at 553.87, the little arse bandit hasn’t given us much in the way of Hidden Pivots to bottom-fish. Nevertheless, we can attempt it this morning if the stock pulls back to 497.19 in the first 15 minutes, bringing the December 550 calls (GOPLY) into bargain range. You should try to buy one of them for around 9.10, using a stop-loss at 496.99. With the stock in such a strong rally, it will probably be easier to try and enter with-the-trend on camouflage; so if you are familiar with the technique, you should try to buy the call on the first ABC rally from near 497.19. ______ UPDATE: We can return to this trade if and when GOOG shows a little more gumption, but for now, cancel the order.
This week’s commentary implies that McDonald’s shares are an attractive long-term short. Most immediately, the stock looks primed to fall to the 85.53 Hidden Pivot target shown. The fact that the stock market’s powerful short-squeeze has lifted the stock somewhat makes the bet even more enticing. Accordingly, I’ll suggest shorting two round lots anywhere above the 91.42 midpoint pivot (i.e., the red line). Use a stop-loss equal to one-third of whatever you stand to gain if the stock were to fall to the target from the price where shorted. This is the “mechanical entry” tactic I have often alluded to in the chat room and which I teach as part of the Hidden Pivot Course. If you prefer to use options, buy the Jan 17/Oct 31 85 put calendar spread 16 times for 0.70 or better. Our goal will be to reduce risk to zero or less by rolling the spread forward, shorting the nearest weekly calendar spread each Friday. _______ UPDATE (11:28 a.m.): With the stock up somewhat this morning — don’t these guys read? — lower the bid to 0.68, and decrease it by 0.01 for each 5-cent gain in the stock above 91.86. _______ UPDATE (7:43 p.m.): The spread closed at 0.70, but there’s not much more we can milk from it, since the October calls we’re trying to short closed at 0.03. Traders who have yet to act should wait to buy eight Jan 17 85 puts ‘naked’ with the stock trading near the 92.59 target shown. Those who are long the spread should first try to cover the short puts with a 0.01 bid, day order. If the order is filled, sit tight for the time being. _______ UPDATE October 28, 10:45 a.m.): The stock gapped up 61 cents on the opening to a spike high at 92.61 that lay just three cents from our target. Subscribers reported paying anywhere from 0.62 to 0.67 for the puts, but absent the aggressive Rick’s Picks bid for a relatively quiet, illiquid series, they should have sold for closer to 0.50. Anyway, I’m now suggesting that you spread off the risk by offering Jan 17 82.50 puts short for 0.56. To avoid crushing these little daisies, let no Rick’s Picks subscriber put up an offer until others have bid 0.52 or better. _______ UPDATE (5:45 p.m.): Forget about spreading off the puts. Assuming a middling price of 0.65 was paid for them, simply use a stop-loss at 0.49. Our beautifully targeted entry three cents from the top of a 60-cent opening-bar gap should have allowed us to easily spread off the entire risk of our position, since MCD dropped by nearly $1 following the bull-trap opening bar. However, because a heavy convergence of Rick’s Picks bidders pushed the puts we bought into the stratosphere to begin with, and because MCD is getting goosed by the short-squeeze on the broad averages, we’ll set a firm limit on risk and stick with it. ______ UPDATE (October 29, 9:09 p.m.): The position was stopped out for a theoretical loss of $128. We’ll get out of the way of this erstwhile glue horse for now, since its brazen distribution is benefitting from a short-squeeze that has pushed the broad averages sharply higher.
Apple’s gap yesterday through the 100.41 midpoint resistance (see inset) strongly implies that its D sibling at 105.64 will be reached. Although a pullback to the midpoint should be treated as a belated buying opportunity, I wouldn’t suggest chasing the stock higher. That said, the four labeled peaks are tailor-made for the Hidden Pivot trader who can employ the ‘camouflage’ technique for getting long. If you understand why, you should go for it! _______ UPDATE (8:13 p.m.): The broad averages pulled Apple back down to earth yesterday when the stock tried to go opposite weakness that surfaced around mid-session. This runs flatly counter to my speculative idea that AAPL might pull the broad averages higher. That’s still possible, since yesterday’s 104.11 peak fell 53 cents of a rally target that remains valid in theory. However, we’ll eschew speculation for now and simply watch to see whether the 102.44 Hidden Pivot support holds (see inset, a new chart). _______ UPDATE (October 23, 1:59 p.m.): Apple has rebounded sharply today, off a 102.90 correction low to a so-far high of 105.05 that’s 59 cents shy of our target. Most longs should have been exited by now. ______ UPDATE (October 27, 8:07 p.m.): Friday’s high at 105.49 came within 0.15 of the target flagged above. Bulls can continue to hold small long positions for a swing at the fences, but I’d suggest tying your shares to a stop-loss based on a downtrending impulse leg on the 15-minute chart. Currently, that would imply stopping yourself out if an uncorrected fall touches 104.52. _______ UPDATE (October 28, 8:44 p.m.): Still long? Be alert at 107.08, a Hidden Pivot target that looks all but certain to be reached but which could stop the rally cold. You should tighten your trailing stop there in any case. ______ UPDATE (October 29, 9:25 p.m.): The rally has shredded some challenging Hidden Pivots, but let’s see if it can bully its way past the 109.07 target shown. In any case, it is my minimum upside objective for the near term.
December Silver appears to be consolidating above a Hidden Pivot midpoint at 17.150, and a close above it today would likely clinch a push to its ‘D’ sibling, 17.775 (or 18.155 if any higher). Night owls could try bottom-fishing at 17.175 using a three-tick stop-loss.