Thursday, April 7, 2011

A Hidden Pivot at 1473.10 is still my minimum upside objective for the near term.  In theory, camouflage will always provide a way to get long or short, but at the moment, any such entry to establish a long position will require expert play. That's because yesterday's high occurred in a place that has no readily apparent ties to Hidden Pivots of larger patterns, and because the rally "should have" gotten to a lesser, 1466.30 target yesterday after it cruised past the midpoint resistance, 1460.70.  Both targets remains valid nonetheless, but I'll leave it up to finagle your way aboard.

We hold four April 53 puts that we'll write off for a $148 trading loss.  It's time to replace them so that we can have a horse in the race for May expiration. Accordingly I'll suggest bidding 0.46 for four May 54 puts.

We hold 300 shares with an effective cost basis of 42.01 that was reduced by earlier profit-taking. My current target is 50.22, and because the stock  gapped through the 46.15 midpoint resistance associated with that target, we'll let our paper profits run for now with no stop-loss.  On the off-chance that SLW swoons, and for the benefit of those who have not yet established a position, bid 44.58 for 400 shares.  _______ UPDATE: Cancel the order.  It was a non-starter because SLW has lurched higher. _______ FURTHER UPDATE (10:11 a.m. EDT): The stock has been socked for a 10 percent loss and moments ago created a bearish impulse leg of daily-chart degree by falling below 422.07.  Hang on, since we weren't aboard just for a trade and knew corrections were bound to be vicious and violent. If the perfect buying opportunity should develop, I will signal it for newbies.

From a Hidden Pivot perspective, it seemed sufficiently difficult to short yesterday's top in the Mini-Dow, and to stay short, that lower prices appear likely.  However, we won't know for a while whether the two Hidden Pivot targets we'd been using in the Mini-Dow and the Mini-S&P will turn out to have precisely nailed the top of the Mother of All Bear rallies begun 26 months ago.  Odds are against this, but as subscribers will have surmised by now, we can get short at every potential top without fear of harm.

Yesterday's high came within four ticks of a longstanding target at 12409, allowing us to get short via camouflage while the weekly tutorial session was in full swing.  There were actually two opportunities to get short, although the first, a minor abc downtrend just below the intraday high, would have stopped out traders for a small profit. We took the second such opportunity in real time, shorting two contracts at a conventional point 'X'. The entry price was 12368, but adjusting it for the paper profit realized when we exited the other contract gave us a cost basis of 12378. A subsequent rally popped us out for no net gain or loss, but we'll keep trying, since shorting at every opportunity has been a winner for us even when we were wrong.  My gut feeling, based on how difficult it was to short the top and to stay short later, is that this brick is headed lower. Most immediately, a fall to at least 12330 appears likely, although this Hidden Pivot will not be very useful for bottom-fishing because it coincides with a key intraday low recorded yesterday. ______ UPDATE (10:38 a.m. EDT):  The low occurred at 12335 overnight, giving way to a rally that so far has left the previous day's 12405 high -- The Mother of All Bear Rally Tops? -- undisturbed.

The 1336.50 target that we've been using as a bullish lodestar caught the exact top yesterday, although it remains to be seen whether this will turn out to have been the Mother of All Bear Rally Tops.  Officially we hold no short position, since I'd suggested using the Mini-Dow instead because its rally target was more appealing. For tonight and Thursday, look for the futures to fall to at least 1325.25 now that the sibling midpoint of that Hidden Pivot, 1329.00, has been breached. You can bottom-fish the target with a two-tick stop-loss, but if the stop is hit, look for weakness to continue to 1323.25.  That's a Hidden Pivot, but it is not advantageous for bottom-fishing because it coincides with structural lows recorded on Tuesday.  Alternatively, a pop tonight or Thursday morning above 1334.50 would turn the lesser charts bullish. ________ UPDATE (10:31 a.m. EDT):  Leveraging some phony, meaningfulness economic data out this morning, DaBoyz short-squeezed the futures after the June contract had dipped overnight to 1326.25, a point from our bid.  The most interesting thing about the rally was that it failed to take out yesterday's 1336.50 high. If Da Sleazeballs are unable to squeeze stocks to a marginal new high on "good" news, this suggests their pulse is weakening.  It seems a foregone conclusion that a new high will be achieved, but the strain of producing it, and others in the recent past, is starting to show.