Tuesday, December 15, 2009

Citi is just crud now, but that doesn't mean we can't try to exploit it for fun and profit.  Okay, the last time we tried, the little sonofabitch beat us out of 80 simoleons. (We bought a few calls at the wrong time, just as the stock  was crashing support -- forever? -- at $5.  Now it seems as though Citi can't get out of its own way, even though the holding company has tried to do the right thing by "paying back" TARP.   The pattern highlighted in the chart shows a high-odds HP target at 3.52 that is made for bottom-fishing.  Accordingly, let's bid 3.54 for 800 shares, stop 3.49.  If the stock bounces as expected, hitting 3.77,  take profits on half the position.

Da Sleazeballs manipulated all of yesterday's gains in the space of 15 minutes on Sunday night.  This means that almost no one got on board and that bears had to spend all of Monday playing a tedious game of cat-and-mouse to get at least some of their shorts back.  What surprises is that Da Dirtballs were unable to achieve any follow-through with more short-squeezing intraday.   On balance, shorts appear to be in just enough trouble to provide buoyancy even with relatively little help from merely bullish buyers.  If so, look for the next squeeze to push the futures up to 1117.25, a Hidden Pivot that can be shorted with a stop-loss as tight as 1.00 point.  The 1110.75 HP midpoint has been exceeded tonight by a single tick -- not enough for us to consider it busted, but close enough to affirm the correctness of our target.

Someone in the chat room said the bullish tripwire I've set at 1154.60 is a bit ambitious, and I agree. But nothing less than that will do if we are to be "sure" that the correction is over. Even so, opportunities to get long speculatively with almost no risk abound, and I've have sketched just such a one in the accompanying chart. Remember, an impulse leg need only exceed one internal and one external peak to qualify as such, and the subtler the better.  "Subtle" is what you will see in this chart, and it is patterns like this one that will allow you to test the water a half-dozen times a day, initiating speculative long positions that are likely to make you a small profit even if you're wrong and the futures fail to get airborne.  There are a dozen people in the chat room intraday who know how to use patterns like the one shown, so don't hesitate to ask if you're not sure.

Touts will be out later this evening, although my thoughts on gold should be clear enough in Tuesdsay's commentary.  Gold is showing slight buoyancy in the early evening, but the E-Minis are in a shallow pullback that has yet to force a breakout.

This has been a great year for gold, but investors can’t seem to shake the jitters they acquired in 2008, when prices plunged 35% between March and October after poking briefly above $1000 for the first time. Is last week’s 10% selloff the beginning of another murderous correction? We don’t think so, although it could take a few more weeks for prices to consolidate for the next strong push.  But more immediately, we expect the Comex February contract to ease to a minimum $1090 in the days ahead. That would represent a $38 decline from yesterday’s settlement price and bring the total correction to slightly more than 11 percent. Although we nailed last week’s 1227.50 top within 40 cents and turned cautious, it is often easier to forecast interim highs in a bull market than to predict the precise course of a correction.  In any event, we’d suggest keeping the 1090 target well in mind this week, since, if it fails to provide a strong bounce, that would imply still more weakness to come.  In any event, using Hidden Pivot analysis, we can gauge the strength of the downtrend by the way it interacts with pivots both major and minor. While we remain somewhat negative on gold at the  moment, we’re prepared to turn bullish on a dime -- but only if very specific conditions are met.  In this case, February Gold would have to rally directly to at least 1154.60 after hitting a tripwire at 1139.30 either today or tomorrow. That would create a bullish “impulse leg” on the hourly chart – a feat that gold has accomplished once since last week’s breakdown, only to reverse unexpectedly the following day. Nothing Has Changed Technical considerations aside, there is nothing in the news to suggest that any of the factors