September 2009

Ambitious targets given today for Goldman and Apple are intended to stretch your imagination. First things first, though: 1053.00 is a potential trouble spot for the E-Mini S&P, and that's as far ahead as we should be thinking as the week draws to a close.

Immediate upside potential is to 177.18, a Hidden Pivot target where you can go short with a stop-loss as tight as 20-30 cents. If AAPL were to shred that resistance, we could be looking at 193.67 by mid-October.

We hold four Jan 130-Oct 130 put spreads with an adjusted cost basis of 2.50. That number reflects a $360 profit we booked yesterday on a September 170 call we'd bought for $200. The gain seemed ambitious at the time -- it represented a 6300% annualized profit(!!!!!), in newsletter-speak -- but it is only after one cashes out of such a position that Goldman's _____ potential smacks one in the eye. That's where I now think the stock is headed if it closes above the 175.05 midpoint. Incidentally, the September 170 calls traded as low as 0.67 on September 2, with the stock around $159. Whoever sold them at that price must have forgotten that when Goldman shares are rampaging, they can easily climb $10 in just a few days. I won't beat myself up for suggesting that you buy just one September 170 call, but the lesson learned is that Goldman is the horse you should bet on if you think a two or three-day decline in the market is likely to be recouped.

Copper has pulled back beneath a key midpoint cited here earlier, so boarding for a ride up to as high as 3.0695 will be trickier.  I'll make this catch-as-catch can for experienced pivoteers only, since I cannot stay closely enough on top of this contract to provide a camouflage for entering.  The chart shows one way in which it might be attempted immediately, bottom-fishing at the c-d midpoint of a retracement pattern.

The 1053.00 target remains shortable, stop 1054.25, but because this number has been loudly drum-rolled, you shouldn't expect it to work as precisely as we  have come to expect of E-Mini S&P targets derived from the hourly chart. Above 1053.00 the task of targeting becomes somewhat esoteric, but I'll suggest using 1065.75 as the next possible plateau or top.

We’ll know soon whether stocks are about to continue blithely higher, since the S&Ps are stealing up on an important Hidden Pivot target disseminated to Rick’s Picks subscribers a while back. Specifically, we projected a potentially important top in the September E-Mini S&P contract at exactly 1053.00. Yesterday, the futures got as close as 1044.00 before retreating slightly in after-hours trading. The S&Ps and other broad indexes have now closed higher for five consecutive days, testing the resolve of bears while rewarding traders who have stayed with the bullish trend.  Buyers have romped since early March, when the futures touched a bear-market low of 662. Since then, the S&Ps have gained slightly less than 58% while the Dow Average of 30 blue-chip stocks has gained 49%.  The latter rally is almost precisely equal to the Dow’s 48% rebound from the 1929 low. This is shown in the chart above. Regarding our 1053.00 target, it is not chiseled in stone, but we’d be surprised if it shows little or no stopping power. The number is called a “Hidden Pivot,” and it is derived from proprietary methods that measure rallies and declines one cycle at a time.  In this case, the cycle is about as clear and compelling as they come, and that’s why we have extrapolated the target to two decimal places.  ‘Chopped Liver’ Rule  So how would we view the rally if it were to simply blow past 1053.00 without hesitating? In such instances, we apply the “chopped liver rule” which holds that Hidden Pivots are not, so to speak, chopped liver as long as they have been calculated correctly. Thus, if a pivot seems not to work, it is not because the pivot itself is ineffectual (don’t take our word for it; click here and you can ask a

I didn't flag today's E-Mini tout as actionable because the 1053.00 target is starting to get a little boring.  It is short-able nonetheless with a stop-loss as tight as 1.25 points.

The short-term picture would turn mildly menacing if December Gold were to print down to 981.40 today. There were no promising handholds for nightowls as of 7:10 p.m., but I'd suggest looking on the 5-minute chart if you are seeking camouflage to get long with a penny-ante stop-loss.

Our offbeat "strangle" in Goldman is starting to work, since the September 170 call we bought for 2.00 traded as high as 3.40 yesterday.  Its purpose was to slightly leverage the upside, thereby lowering the effective cost of four Jan 130 - Oct 130 put spreads that we also hold (for 3.40 apiece). Today only, offer the call to close for 4.80.  If the order fills, it will reduce our cost basis on the spreads to 2.70.