Thursday, January 13, 2011

A Hidden Pivot target at 1391.30 is still my minimum upside objective for the near term, although the ascent to it has been untradable for anyone managing risk methodically. The price action has been dispiriting, especially with weakness in the dollar as a backdrop. A pop today to 1397.60 would be reason to take encouragement, although nothing to get excited about. I still see price action in Gold as a lazy consolidation, but a dip below 1352.00 would be reason for concern. _______ UPDATE (10:43 a.m. ET): The futures made it to 1392.90 overnight before falling back $13 in their accustomed fashion. If the familiar pattern holds, they'll be buoyant for the rest of the day, but not buoyant enough to reach new recovery highs.

HOLY SMOKE!!  It appears that a Hidden Pivot target that took 14 weeks (!!) to reach is about to be eroded away in the space of just two days.  Since I'd advised tying our two February 310 puts to a break-even stop-loss, you might have covered them as early as Tuesday when they relapsed to 2.79; but in any event no lower than  2.65, Wednesday's opening price.  Although a profit was possible for the nimble, the maximum loss on the position would have been $44 plus commissions.  Apple would now appear bound for a minimum 383.50, pending a two-day close above 344.61.  (Use the daily chart, where A=235.56 on August 27.) I received an e-mail from a subscriber who apparently made money on the initial trade, but he couldn’t have made much, and the position may have turned into a loser if he was busy patting himself on the back as Apple began to climb yesterday.  He wrote as follows:  “I shorted AAPL stock at your ‘D’ and unlike the folks who today have been raped by the option floor, I’m looking at a very nice profit. Another great pick.”  Here’s my reply:  “Hope you were able to cover some of the position on the dip, since there’s always the chance we’ve been premature in anticipating the Mother of All Tops – especially in the shares of a company that will be raking in money by the zillions, one measly iTune dollar at a time, even if the economy sinks into Depression.  This aspect  of Apple’s business model is the retail world’s equivalent of nickel slot machines.”

Early Thursday morning, a tortuous climb presumably devoid of buying other than short-covering by a few nervous Nellies, has gotten within a single point of the 1285.25 rally target flagged here. It is still valid -- and still short-able with a 1286.25 stop-loss -- although the odds of a quick and easy profit may favor night owls, since pent-up shorts could make quick work of the hidden resistance on an opening gap.  If you've made money on the long side of this well anticipated rally, you can widen the stop to two points. ______ UPDATE (10:30 a.m. ET): For whatever reason -- sabotage by Goldman Sachs? Boris Putin? Sarah Palin? -- the futures have stalled at exactly 1284.50, three ticks from our target. Since a 7-point pullback has ensued, the "No Sloppy Seconds Rule" applies, and I am therefore recommending that you cancel the order.

Of course I was exaggerating when I said that nothing could stop this Bear Rally from Hell.  Obivously, something eventually will, but we should have learned by now not to expect too much whenever we attempt to impede Mad Money with a modest short offer.  We've also learned that we can do this as often as we damned well please -- the short in AAPL being the most recent example -- without Mr. Market ever laying a glove on us.  Using Hidden Pivot targets, we also have the ability to trade each rally from the long side, cursing it all the way to the bank.