The predicted low at 1378.70 appears to have done its job, nailing the so-far bottom of a $30 decline within 20 cents while keeping us properly bearish almost the whole way down. Keep in mind that if this midpoint Hiddden Pivot support fails, the futures would face the prospect of more weakness over the near term to as low as 1348.50. They won’t be out of the woods tonight, though, until such time as 1389.00 has been exceeded to the upside. If you got long at the bottom on your own initiative, partial profit-taking and a break-even stop would have been s.o.p., since the futures have bounced nearly $5 from the low.
From the monthly archives:
December 2010
We’re long 800 shares with a cost basis of 14.27 against eight January 34 puts that we bought for 0.77. Let’s reduce our premium exposure by shorting puts of a lower strike. Accordingly, I’ll recommend that you offer eight January 32 puts short for 0.72, good through Friday. They closed yesterday @ 0.46, but the stock would have to fall t around 36.40 to get us filled.
We hold four January 111 puts for 0.97 bought shortly after the opening on Wednesday. The options were acquired not because the Diamonds were peaking at a Hidden Pivot target, but because they were starting to look tired. I am unable to project a downside target at the moment, other than a minor one at 114.59 (or 114.39 if any lower). That’s a Hidden Pivot, and because its sibling midpoint at 114.87 has already been breached, it can serve as a minimum objective for now.
A short-squeeze rally in the opening hour failed by two ticks to exceed an ‘external’ peak from Tuesday, providing the evidence of gutlessness we needed to justify taking the rest of the day off. It was all downhill from there, albeit not steeply enough to provide any special opportunities for shorts. The selling was labored, and when five hours of huffing and puffing was done, the intraday low and high were separated by just ten points. Traders will find numerous downtrending abc’s to look at Wednesday night, but the only one that I half-like will engender a midpoint support at 1229.25 – too close to the intraday low to be worth much for trading purposes. For your information, its ‘d’ sibling lies at 1224.00.
Just for the hell of it, let’s try to buy four January 111 puts. They closed @ 1.01, but I’ll recommend bidding 0.97 for them at the opening. Stay tuned, since I may adjust the price. _______ UPDATE (9:53 a.m. ET): We bought four puts for 0.97. Do nothing further for now.
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A Hidden Pivot at 1245.25 is equivalent to the one at 1250.25 that I gave here earlier for the December contract, and there should have been no problem achieving it. The fact that there was a problem should command our attention and tilt our bias negative for now. Night owls can nevertheless try bottom-fishing the 1228.00 target of the corrective pattern show, but you should pay close attention to price action at the 1232.75 midpoint, since a precise bounce would corroborate the ‘d’ target itself.
A midpoint support at 28.615 is equivalent to the one given in today’s Gold tout, and it can serve as a minimum correction target for the next day or two. A pop today above 30.000 would turn the short-term picture bullish, but 30.295 or higher would send bears scurrying and retrain our focus on the big-picture target at 32.285 given here yesterday.
We can use the 1378.70 midpoint shown in the chart as a minimum retracement target, since Gold seems to be having difficulty sustaining altitude at the moment. Night owls can use the corrective pattern at the right edge of the chart to bottom-fish at 1390.10, the ‘D’ target of yesterday’s histrionics. A two-tick stop-loss is what it’s worth, since the downtrend has gone sloppily sideways early Tuesday night. The short-term picture would turn bullish again on a print today exceeding 1412.30. _______ UPDATE (1:48 a.m. ET): The pivot at 1390.10 evinced no support whatsoever, implying that the downtrend is bound for a minimum 1378.70.
Moody’s ‘Threat’ Sends Gold, Silver Reeling
by Rick Ackerman on December 16, 2010 12:23 am GMT · 44 comments
Bullion prices seem likely to remain under pressure for the rest of the year now that Moody’s has trained its water hose on…Spain! Yesterday, the ratings firm dithered its way into the headlines with a threat to downgrade Iberian debt. Presumably, this was done at the behest of Geithner, Bernanke & Friends. Regardless of who ordered the hit, it sufficed to touch off yet another headless-chicken scramble into the alleged “safety” of the U.S. dollar. The timing of this conspiratorial boost to the buck suggests that the Plunge Protection Team is getting better at its job with each passing month. By our runes, the dollar was poised for a breakdown. Lo, just as the selloff begun on Monday was starting to snowball, the dollar whipped around and began a steep » Read the full article