Monday, October 12, 2009

It looks like Apple's next thrust may not quite get it to the promised land, since there's a Hidden Pivot resistance at 199.90. The stock has been pussyfooting near the target's midpoint sibling, 190.30, but if it can close above it, a run-up to within a hair of $200 would become an odds-on bet.

Index futures were glowering menacingly toward bears Sunday night, but they'll probably need an assist from the news to start the week off with a short squeeze. A detectable amount of restraint may be in evidence due to Columbus Day, a bank holiday that is likely to keep bond markets subdued.

We  are long the December 12.50-December 15 call spread eight times for a credit of 0.15 per, having legged into it at great prices. No adjustment is suggested at this time, since I expect the stock to hit a minimum 15.31 before the  options expire.  As of now, I'm planning to cover the short December 15s and letting our long calls turn into stock that would become the core of  long-term position.

Because the recent low at 65.55 was as low as could have been projected using the intraday charts, we should assume that the struggle of the last few days is an earnest attempt to gain traction. The fact that the December contract has popped above 69.31 implies that the effort may not be in vain, since it created a bullish impulse leg on the hourly chart.  However, it will take at least 74.81 to suggest that bulls have set their sights on $80.

A 72.93 target first broached here a while back is still very much in play and will remain so unless DXY can push above the target's sibling midpoint at 77.20 and stay there for at least two days.  More tentatively, a push today exceeding 76.71 would suggest a bullish reversal with at least minor-league potential.

The next mini-milestone on the way up is 531.16. Call options are far too pricey to buy on a mere bullish whim, however, so any attempt to catch a ride should seek out the cover of camouflage.  The most logical place to look for it would be on a pullback to 505.58, the midpoint pivot associated with the target.

We'll use a Hidden Pivot at 1077.25, the target of a minor pattern, as a minimum upside target. Stocks are trading above its sibling midpoint, 1067.00, Sunday evening, hinting of yet more strength to come over the near term.  Your stop-loss for a short would need to be wider than usual, at 1079.25, since there is a second target at 1078.25._______ UPDATE (12:06 p.m.)The futures slithered up to 1076.75, two ticks from our target, in the dead of night but have been unable to advance any further. ES has spent five hours pussyfooting  within inches of our number, and although the higher target is still valid in theory, it is too stale to enthuse over  as a place to get short.  Higher prices seem likely at this point because the pullback has been so shallow.  If you're looking for a camouflaged long entry, try 'X' following a pullback from 1076.50.  B-C-x could unfold in a hurry, but that's what would make the trade "safe". 

Henry Blodget, of all people, is out on Huffington writing stuff worth reading.  Click here for his "Scariest Jobs Chart Ever," which spells out some of the reasons to be skeptical about any claims of green shoots or economic recovery.

By puncturing the 1060 peak recorded in March of 2009 last week , the futures demonstrated their appetite for bigger things -- presumably a push toward a Hidden Pivot at 1134 identified here earlier. First, though, they'll need to reckon with a lesser but still formidable hidden resistance at 1074.50 that has been drum-rolled here.  The less effort they display getting past it, the shorter the wait, probably, before bulls storm higher into new record territory.  Most immediately, the lesser intraday charts would need to see a print today at 1053.90 before we could be reasonably certain bulls are ready to kick butt. The speck of resistance at that number is shown on the accompanying chart, and it deserves the same level of respect we gave the one at 1011.90 that signaled the start of this nearly 50-point rally.  Any b-c pullback from just above it should be seized upon as a camouflage opportunity of the most felicitous kind.  In the accompanying chart, I've sketched out how a stealth entry might play out in idealized fashion. _______ UPDATE (9:43 a.m.):  There was good camouflage for boarding a $5 rally with very little stress, although it did not unfold in precisely the way shown in the chart. Instead, the A-B impulse leg (nicely visible on the 15-minute chart) topped at 1053.70 (at 5:15 a.m. EDT) before pulling back to 1052.10 for point 'C'.  Entry (aka, point 'X') would have come at 1053.30, tied to a target at 1056.80 that was ultimately exceeded by 1.50 points.