Monday, November 15, 2010

Close but no cigar.  As noted here earlier, the Dollar Index's purely technical rally will have to surpass 78.69 to temporarily elevate itself above "wuss" status.  My hunch is that it will do so sometime today or tomorrow, earning our bemused attention if not our respect.

Our theoretical gain on the two Nov 300-310-320 butterfly spreads we'd held until Friday was $1360 -- about 35 times the sum we'd put at risk. I advised closing out the position in the chat room, and also via an intraday update to the AAPL tout, when the stock was crossing the "equator" of maximum profitability at $310.  AAPL did so not only on the way down from $316 that day, but on a subsequent bounce to 310.91 from 303.63, the intraday low.  If you missed exiting you can do so this week at will.  Even if you were to receive just $6 for the spread, your theoretical reward:risk would still have been 30:1. Keep in mind that we are still long the November 320 calls for "free," and that they could conceivably be sold for an additional profit if the stock should poke its pointed little headed above water this week.  In any event, I strongly doubt that AAPL has seen an important high, since it is one of the few companies in America whose huge stream of revenues could conceivably buck hard times.   Recall that when we put on the spread, it was based on a $315 target I'd projected when the stock was trading in September for around $280. I hadn't expect the target to be achieved before the November option expiration, but in the actual event AAPL surpassed our benchmark by $6 nearly two weeks early.

This flying pig has been losing altitude for a week, but not nearly quickly enough to satisfy the bearish appetite.  Still more dispiriting is that it would take a rally today to just 1211.50 to undo the candy-assed downtrend of recent days. Be that as it may, of all the punk patterns yielding potentially tradable targets, I like best the one that points to a Hidden Pivot support at 1184.75 for purposes of bottom-fishing.  An initial stop-loss at 1183.75 is suggested.

A previously identified Hidden Pivot support at 25.250 remains my minimum downside objective, and it can be bottom-fished with a 25.255 bid, stop 25.245.  Alternatively, and unlike Gold, Silver needn't rally strongly today to turn the 15-minute chart bullish.  The chart shows why a print at 26.490 would do the trick.  _______ UPDATE (9:34 a.m. EDT):  Hahaha how very cagey, the futures have topped so far this morning at 26.480.

Instead of speculating nervously about whether Gold is headed into some sort of horrendous decline -- a prospect which I strongly doubt -- let's simply focus on what Gold itself is telling us.  For starters, bulls would be back in charge of the day trend if they can push the futures above a very small peak at 1379.00 that's nicely visible on the 15-minute chart.  Failing that, and assuming no intervening move above 1375.50 (aka point 'c'),  a midpoint support at 1357.60 can serve as a correction target for the very near-term.  If it should fail decisively, however, we could infer that more downside awaits to at as low as 1339.80, its 'd' sibling.  A third Hidden Pivot support sits at 1354.70, and it looks to me like the most opportune spot to try bottom-fishing.  All three price points are shown in the accompanying chart. ______ UPDATE (5:29 p.m. ET):  How very coy.  The low of the day was...1354.80, a single tick from my number, but officially we'll score it as "nothing done," since, strictly speaking, the microscopic miss was as good as a mile.  If, for your own reasons, you did buy a tick off the low, you have a nice profit cushion to play with, since the futures are currently trading 1360.00, up $5.20 off the bottom.