December 2010

I was contriving to ignore the E-Mini S&P for a second day; lo, they've just created a potentially exploitable impulse leg on the 15-minute chart -- one that promises to help night owls chase boredom, at least.  I doubt DaBoyz will push things, taking the futures above Tuesday's peak overnight, but the pattern shown in the chart could develop into a springboard for a leap on the opening bell.

Early Wednesday evening, the futures stabbed above a key high recorded Tuesday on the way down, creating a bullish impulse leg on the 15-minute chart in the process.  Assuming the rally does not take out Tuesdays's peak as well, it could conceviably create a camouflage opportunity for night owls.  I've sketched out a possibility in the accompanying chart to help guide you. ______ UPDATE (12:52 a.m. ET): The trade was triggered a little after 9 p.m. at 1233.25, and although it took the rally an hour-and-a-half to get airborne and theoretically profitable, it reached its primary target, 1236.75, around 12:45 a.m.   The so-far high is 1237.50, but there is room to at least 1239.25, and thence 1241.00, before the weight of Hidden Pivot resistances will be felt. 

We hold two January 280 puts for 2.00 -- a longshot bet that AAPL will come unglued by no later than early 2011.  This seems pretty farfetched, since I am more bullish on AAPL than any other stock. That is in fact my rationale for shorting the stock, albeit gingerly.  Our goal is to spread off premium risk if and when the stock falls, but so far it has given us no opportunity to do so.  For now, do nothing further. _______ UPDATE (December 13, 11:22 a.m. ET): With AAPL, the most profitable and innovative company in America, blazing a trail this morning into new-record highs, I'll suggest closing out the puts for 1.15-1.20.  With two held, our theoretical loss is $170.

The downtrend maxes out on the lesser charts at 27.025, but smaller corrective patterns could turn things around as early as 28.045.  That's too close to Wednesday's lows to use for bottom-fishing, but if the slippage continues, try bidding 27.465 with a three tick stop-loss.  Those last two Hidden Pivot supports would be invalidated by a print at night exceeding 28.635.  One more place to look for a turn:  27.485.  The pattern looks too gnarly, however, to bid there with our wonted penny-ante stop-loss.

A conventional trendline broke Gold's fall yesterday -- and you can judge for yourself how solid it looks in the accompanying chart.  The move is bearishly impulsive on the hourly chart nonetheless, but the futures would have to fall straightaway to 1317.30 to register a bearish impulse leg of daily-chart degree. Most immediately, they'll need to rally to at least 1405.50 today to get out of jeopardy.  Night owls can try bottom-fishing at 1375.20, stop 1374.90, if 1387.50 has not been exceeded to the upside. Please note that if the stop is hit, Feb Gold would be signaling more downside over the near term to at least 1362.80.  That would represent a correction of about 4.7% from the all-time high.

[Gold and silver have been hit hard this week, so it is probably a good time to remind ourselves that the factors that have been driving bullion prices higher for the last decade are still very much in place – are indeed more powerful than ever.  In the following interview, Greg Weldon of Weldon Financial explains why this is so. We are grateful to our friends Michael Campbell and Robert Zurrer at MoneyTalks for sharing the interview with Rick's Picks'  readers. RA] Michael Campbell: What are the implications of solving a huge debt problem by taking on more debt? Greg Weldon: It’s more than Ireland or Greece when you think that 25 out of 27 EU nations are in violation of rules on either debts or deficits relative to their GDPs. We’ve been saying for a long time that for Europe to bail out Europe is ridiculous. To think that the U.S. is going to commit a trillion dollars to any foreign bailouts is even more ludicrous. Really, the spark in the stock markets around the world was that comment from an unnamed U.S. official that the United States promised to buoy up the International Monetary Fund with another trillion dollars. The European Central Bank has been in a program to buy debt, but they sterilized that money they put in the system by withdrawing it at the back end. So they are not even really playing ball to begin with to the degree that the Fed has in the U.S. Having said that, the European Central Bank is expanding their balance sheet again. The Bank of Japan balance sheet just hit a new interim high. The U.S. bought a lot of bonds and unfortunately they’ve had mortgage roll-ups, so they haven’t yet net expanded their balance sheet to new

DaBoyz were using paper cuts to force bullion lower Tuesday night, one dime at a time.  We have clear correction targets to monitor in both gold and silver, so there's no need to take chances or to be a hero.

I sought  feedback in the chat room yesterday from traders who may have used my 42.34 target to put on a hedge at the very top, but there was none (although one person evidently noticed that the target came within three pennies of nailing the actual high).  The top occurred on an opening-bar spike of 1.50, so it may endure for yet a few more days if not longer.  Meanwhile, we'll carry the Jan 34 puts for 0.77, which is about halfway between the criminally-rigged opening price and the intraday low.  For now, use a 67-cent stop-loss for the puts. Our goal, if SLW eases further, will be to leg into a sell-side something-or-other put that will give us some premium income.

There is nothing here to even remotely engage our interest at the moment, and I'm not going to force targets, even for night owls.  Yesterday's decline breached no external lows, so our bias should be bullish coming in this morning. That would of course change if the futures were to penetrate even one of the three lows on the hourly chart going back to Friday.