We are long 800 shares with a cost basis of $12.90 against eight January 17 calls shorted for 0.80. It is time to cover the calls, since they can be bought for as little as 0.05. Do so, shorting eight February 17 calls at the same time for 0.40. If successful, we’ll have rolled the covered write and reduced our cost basis on the stock to 12.55.
From the monthly archives:
December 2009
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Bulls dominated yesterday, although it’s curious that they couldn’t muster just a little more thrust to take out the 77.99 external peak I’d flagged as a bullish trigger point. This feat seems likely to be achieved today, which would square with my current, dour forecast for gold. The nearest important Hidden Pivot resistance above lies at 78.25, and it can serve as our minimum upside target for the near term. If DXY exceeds this number on a closing basis, though, it would be hinting of more upside to at least 79.18.
We bought two January 230 calls yesterday for 1.00 and have bids in for four more: two @ 0.52, and two @ 0.42, both good through Thursday. This is a speculative bet on the prospect of a Big Rally kicking off the New Year. This seems plausible if not likely, but if it does occur, you can bet that AAPL shares will lead the charge. I expect the stock to regain traction, though not to explode higher, by week’s end.
Shortly after 8 p.m., the futures were struggling to find traction at 1091.30, the very tradable Hidden Pivot support shown in the chart. They’d need to rebound to at least 1110.60 on Wednesday to turn the momentum in bulls’ favor; otherwise a 1046.80 target will be in play, along with another at 1028 that comes from a larger pattern identified here earlier.
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The futures have pulped the 116^20 downside target given here a couple of weeks ago and now appear bound for at least 113^13. The bonds could catch a bounce on the way down from 114^17, the Hidden Pivot midpoint of a long-term pattern, but if it gives way easily, that would shorten the odds that the lower target will be reached sooner rather than later.
Six weeks of gratuitous chop has taken the fun out forecasting this vehicle, but I’ll mention a 10,728 minimum target nonetheless, in case you were wondering. That’s a Hidden Pivot resistance, and it’s been the rally bet since November 16, when a breakaway thrust tripped an alarm at exactly 10,310
The correction from last Tuesday’s peak should turn from 77.44 or higher if bulls are to resume their dominance. That would become instantly true if DXY were to pop above 77.99 today. Traders looking for a place to bottom-fish can use a 77.02 target — my worst-case low for the near term, but also the spot with the best odds for speculative buying. _______ UPDATE: DXY has surged today, but the rally peak has thus far failed to take out the look-to-the-left peak at 77.99 mentioned above. Bulls are obviously in charge, if noticeably lacking in guts.
