Wednesday, August 18, 2010

I described yesterday's toying with Wal-Mart earnings as a game of "chicken," but DaBoyz gave away their hand in the closing hour when they dove out of stocks. This should tend to make it harder to lift shares on merely so-so news, but if it's not forthcoming don't be afraid to sell into whatever minor rally is promoted.

I mentioned here earlier that Apple's churn since last spring is an oddity, considering the company's world-beating performance as an innovator and marketer of consumer electronics. Let's actualize this observation with a modest speculation, offering 200 shares short at 259.04 (a Hidden Pivot midpoint off the hourly chart, where A=240.01 on 7/20), stop 259.21, good through Friday. ____ UPDATE: Cancel the trade, since AAPL has gone too flaccid and boring to care about at the moment.

The futures appear to be consolidating around a 425 4/8 midpoint resistance whose 'D' sibling lies at 445 2/8. Since most of the price action over the last three days has been above the midpoint, we should infer that a thrust to the target is imminent.  Please note that the "softs" are notorious for making such moves either when Pivoteers are sleeping, or in such a way as to be inaccessible via a conservative buy-stop entry. In this case, any print above August 16's 433 high would create the impulse leg needed to create a possible camouflage opportunity.

We hold a long-term position of 800 shares with an adjusted cost basis of 12.95. Although I'd intimated that a resumption of our covered-write strategy would be appropriate when the stock pushed above 20, option premiums are a bit lean at the moment, and so we should wait for a possible thrust above June's key high at 21.89 before we act. Even if SLW is unsuccessful on the first or second try, put and call prices are likely to get a boost merely from the effort. From a Hidden Pivot standpoint, the stock looks like it's entitled to at least 21.36 (a Hidden Pivot off the daily chart, where A=17.88 on 7/28) before serious resistance encroaches. The midpoint associated with that number is 20.21, and therefore a logical place to try bottom-fishing with a camouflage strategy. ______ UPDATE:  The rally made it to 21.36 but got a little wheezy just above that pivot. Obviously, the stock is taking the measure of June's key high at 21.89, so we'll need to be patient. Although SLW's approach so far may lack for boldness, it is at least game.

A Hidden Pivot target at 476.74 is the number to beat (or at least achieve) for today. Its provenance is shown in the chart, along with an alternative target at 484.23 that should be considered the best-of-all-worlds price objective for this week or early next.

Gold should soon achieve 1236.70, the lower of the two targets given here yesterday, and perhaps even the higher at 1244.20. But it is showing so little gusto in getting there that we'll need to be on the alert for any change of direction that is signaled on the lesser charts. For today, use 1223.50 as a bearish threshold, since a print at that price would create a negative impulse leg on the hourly chart. Alternatively, take encouragement if the futures vault a minor midpoint resistance at 1232.20 in the early going.

DaBoyz managed to squeeze a 100-point Dow rally out of punk Q2 earnings from Wal-Mart and Target, and the gain might have been closer to 200 points had traders not suffered an uncharacteristic anxiety attack in the final hour. Imagine what these bandits could get away with if there were actual good news to leverage. Trouble is, it’s unclear what would even qualify as good news these days.  A rebound in employment sufficient to put the economy back on track is almost beyond imagining, since it will take fully eight million new jobs and re-hires just to replace the positions that have been lost so far in the Great Recession. As for a surge in the retail sector, Americans have doubtless wised up to the fact that more consumption will never be the ‘A’ answer. Not that any of us is bursting with eagerness right now to binge on flat-screen TVs, quartz countertops and hot tubs. The news media remain behind the curve on this matter, since each and every anomalous uptick in retail sales – i.e., the mediocre, 3.6% gain in profits announced yesterday by Wal-Mart -- is greeted as fresh evidence that the economy is somehow hanging in there. As any sentient adult will have long since surmised, it is not the economy that is hanging in there, but the stock market. The Dow is trading above 10,000, so how bad could things be, right? Or so the thinking goes. We suspect that this argument is losing its hold on the nation, and that when Brian Williams or Katie Couric mentions that stocks jumped 1% on a given day, most viewers greet the item with a shrug. And those who truly understand the markets just shake their heads, wondering how anyone could be so naïve as to think