Friday, January 28, 2011

We'll record a theoretical gain of $154 from two February 5 calls just to get this limping lump of  brick dust off the sheets.  There are numerous reasons why the stock might turn around, or even leap higher, but the whole point of the exercise was to make a cupla bucks on a hot tip, and that we have done.  Fare thee well, Eastman Kodak.

We've been waiting patiently for an eon to short the E-Mini S&P, but I would caution against initiating the trade if the futures somehow contrive to reach the target with an hour or less remaining in the session.  It was never my intention to take the position home over the weekend.

Amazing how the futures can continue to drag themselves higher even when buying interest is very evidently close to zero.  A Hidden Pivot target at 1305.75 is still my minimum expectation, and you can still short it with a stop-loss as tight as three ticks.  Officially, we'll risk 1307.25, since the rally has taken so long to get there that we'd hate to miss a potential top. I am mildly uncomfortable with the fact that the target has been advertised for so long, so don't be too surprised if we get front-run.

All of this week's bottoming action has taken place just above some key lows recorded in November, so I am hesitant to infer that lower prices -- meaning beneath Tuesday's 26.540 bottom -- are certain.  If the  futures do fall, however, they would probe possible Hidden Pivot support most immediately at 26.385, the 'd' target of the minor pattern shown in the chart. Below it, especially on a closing basis, there would be jeopardy to as low as 24.485. Alternatively, the futures would need to pop today to 28.575 seriously challenge bears.

I drum-rolled a target for April Gold in today's commentary, but without giving away the goodies to non-subscribers.  The Hidden Pivot I alluded to lies at 1291.90, and it looks like a high-probability bet to me, subject to a 1290.90 stop-loss.  It is my minimum downside objective, basis April, but as implied in the commentary, a decisive breach would portend more slippage to at least 1277.80, a target derived from the higher 'A' at 1394.70.

Gold and Silver got whomped again yesterday, adding yet more carnage to a correction that will soon enter its fifth week. For long-term investors who have chosen to ride out the storm, the selloff must seem brutal. And yet, from early December’s high at $1432 to yesterday’s $1310 low, the loss so far has amounted to just 8.5 percent. Granted, it’s been worse for some owners of mining shares, which have declined by a little more than 17 percent, basis the ARCA Gold Bugs Index. But even that falls shy of the 20 percent standard that is often applied to distinguish moderate corrections from truly ugly ones. How much further will bullion and precious metal shares fall?  Rick’s Picks has been using a worst-case target of 1296.50 for the Comex February contract.  It was first identified in the following trading “tout,” with the futures hovering around $1332:  “A 1296.50 target can be tortured out of the chart I’ve furnished, and its [technical] provenance is shown in red.  Because the pattern yielding that target is so visually un-intuitive, and because the breach of $1300 would touch off a minor panic, I’d categorize 1296.50 as a back-up-the-truck price where February Gold could — and should – be accumulated aggressively." A Buying Opportunity So there you have it:  With respect to gold futures, we regard anything under $1300 as a buying opportunity. With respect to the April contract that has just become active, the precise target is a bit lower than the one at 1296.50 identified above. If you are not a paid subscriber but would like to find out the exact number, a Hidden Pivot derived from proprietary calculations, you can access it by taking a free seven-day trial subscription to Rick’s Picks. Click here to sign up.  Once registered, you will also have access