Friday, September 10, 2010

Yesterday's rally cleared two daunting external peaks (labeled), setting the stage for bullish action in this stock for weeks, if not months. We can use the 275.44 midpoint of the pattern shown as a minimum upside target for the next week or so, but once it is exceeded on a closing basis -- which I  expect -- the stock will have a shot at 315.32, with only one hidden resistance at 280.86 to buck the stampede.

It was all downhill yesterday after the opening bar, and you can look for the same, dead-tired, bull-trap con-game again this morning, except with perhaps even less energy. Regardless of whether the first hour will be as good as it gets, night owls can bottom-fish a Hidden Pivot support at 1098.25 with a stop-loss as tight as two ticks. The relevant pattern is shown in the accompanying chart. _____ UPDATE (12:45 p.m. EDT):  Today's "action" is indeed almost too tiresome to watch. Cancel the bottom-fishing bid, lest the demands it makes on one's attentiveness arrest the heart. 

Yesterday's opening-bar short squeeze noticeably failed to pierce a pair of weakling highs recorded in mid-August, subtly hinting of buyers' gutlessness right now. We rarely speculate on such things, but what could it hurt to take a couple of put options home over the weekend? Treat this trade like a likely loser -- meaning, don't buy more than the couple of put options I am about to suggest. Make them October 101s, which settled yesterday at 1.39.  A price anywhere between 1.25 and 1.35 would be okay, but keep in mind that they will start to feel the weight of expiring September puts toward day's end, so if you are modeling their fair value, Monday's date is the one to plug in. _______ UPDATE (12:41 p.m. EDT):  We bought two October 101 puts on the opening for 1.33, a penny off the so-far intraday low. Now, put them out of mind for the time being.

Yesterday's selling was weakly impulsive because the futures needed a couple of running starts to take out some prior lows.  The last of them projected down to 19.575, a Hidden Pivot target that you can bottom-fish via a 19.570 bid, stop 19.555.  It seems likely to be reached because the sibling midpoint support at 19.735 has been trashed and is acting like resistance Thursday night. ______ UPDATE (11:23 a.m. EDT):  Buyers overpowered bears overnight, turning the futures from a 19.700 low to lend yet more weight to the likelihood of a move over the near term to at least 21.630, or 22.505 if any higher.  Please note that these are important numbers with the potential to produce a top of at least intermediate-term importance.

Gold got flogged yesterday and will need to do two things to get back in bullish gear: 1) hold above the intraday low, 1243.50, which is also a midpoint support; and 2) surge to at least 1260.60, creating a bullish impulse leg on the hourly chart.  If the midpoint is breached to the downside by more than $1.00 or so, however, it would likely spell more weakness down to at least 1235.90.  A close below that number would leave bulls on the defensive when the markets reopen on Sunday night. _____ UPDATE  (12:30 p.m. EDT):  The futures have lapsed into screw-the-pooch mode this morning, creating a bullish impulse leg on the lesser charts after failing by $2 to reach the projected low at 1235.90.  On balance, the picture is mildly bearish, but not sufficiently so to warrant further analysis. Gold should right itself shortly.

[Like your editor, Rick’s Picks forum regular Wayne Razzi (aka “Red Will”) is a veteran floor-trader who grew up in South Jersey.  When I asked him if he would like to contribute a guest commentary, I was not expecting the provocative tour de force that unfolds, step by step, below. In the essay, Will asserts nothing less that that the impending collapse of our economic system was meticulously engineered by financial and political sociopaths. Let me attest that his is not some whack-o conspiracy theory; rather, it is the closely-reasoned argument of a highly intelligent person who values truth sufficiently to have searched for it, in the form of an answer to a profoundly disturbing question, for many years. Judge for yourself whether his conclusions tally with your own thoughts as to why the American Dream is about to go bust. RA] As a regular reader of Rick’s Picks and occasional commentator within the forum, I was happy to accept Rick’s offer to contribute a guest commentary.  Unfortunately, my happiness faded rather quickly as each day of the week passed and with each, more and more commentary appeared within the forum.  Normally I am pleased to read through the robust collection of viewpoints and argumentation.  However, and quite regrettably, these are not normal times!  With each day, and each comment, and each reply, I witnessed a slow motion, apathetic paraphrasing of much of my prepared commentary by faceless strangers! So with my best-written plans bested by many of you bloviators. ;- ) , I elected to go with something entirely different instead of offering my all-too-similar take on many of the economic issues that were covered and subsequently expanded upon within the forum. I have a few things in common with Rick, one of which is having been born and