We discovered a look-to-the-left peak during yesterday’s impromptu trading session that could hold the key to any recovery that impends. It lies at 39.565, and you can see how unprepossessing it is on the hourly chart. Even so, an impulsive, uncorrected thrust that exceeds it after breaching Wednesday’s 39.470 high would signal powerfully that bulls are once again in control. Failing that, however, I would expect the futures to come down to at least 31.205, the midpoint support of a large corrective pattern.
From the monthly archives:
May 2011
There are a couple of lesser corrective patterns with implications less punitive than the 1470.10 midpoint support proffered here earlier as a minimum downside objective. Unfortunately, however, the respective midpoint supports of each have been breached decisively, reinforcing my earlier conclusion that a dip to 1470.10 may be as good as we can hope for. Still, the fact that yesterday’s encouraging recovery occurred from a low 7.50 points above our target opens the door to the bullish signal that would be generated if the futures were to exceed 1543.50 without having gotten down to 1470.10. This is shown in the chart.
We’re short a single contract from 1363.00, but keep in mind, as the little s.o.b. slithers out of the ooze yet again, that the seemingly inevitable thrust to stupid new highs will not deny us at least a small profit from a trade ostensibly gone wrong. Maintain the recommended stop-loss at 1358.50 — and count on using any proceeds we take away from this trade to cushion the stop the next time we get short. ______ UPDATE (12:30 p.m. EDT): Ahhh, that’s more like it! With the futures down 17 points at the moment, our short position is looking pretty good once again, having survived a challenge overnight posed by a feeble, volume-less short-squeeze. We are still shooting for at least $5000 of profit per contract, so continue to maintain positions.
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Silver’s 480-minute chart yields a somewhat different picture from the one I’ve displayed next to today’s Gold tout, since the most serviceable one-off ‘A’ occurred slightly later in time. Instead of trying to reconcile the two, I’ll offer the midpoint and ‘D’ target of a lesser pattern (shown): 34.825 and 30.180, respectively. The first lies 20 cents below current levels and should be used a minimum downside objective for the near term. If it gives way easily, however, the presumption would be for a further fall to at least 30.180.
We came upon the 1470.10 midpoint support shown in the chart during yesterday’s tutorial session, and I am recommending that you use it as a minimum downside objective for now. I expect the bounce from it to be precise and tradable, although not necessarily long-lived. Because the all-time high at 1577 fell short of the target I’d proffered at 1581, odds slightly favor a resolution that ultimately reaches the 1413.50 ‘D’ target of the pattern shown.
July Crude is closing on a crucial midpoint support at 95.11, but if it fails we could expect the selloff to continue to as low as 85.07. Alternatively, on the hourly chart it would take quite a rally — to at least 109.86, to put bulls back in charge.
We hold 300 shares from 42.01 against three June 40 put-May 38 puts spreads legged on for a 0.50 CREDIT. Legging out of it has proved to be more than a small annoyance, since the stock hasn’t quite reached our rally targets although its declines have been on opening-bar gaps. I will nonetheless recommend exiting the May puts today at-will, catch-as-catch-can. Officially, I’ll buy them back at-the-market on the opening. But subtler, more profitable tactics will be possible if you use Hidden Pivot coordinates as follows: On weakness, my minimum downside target would be 33.44, the ‘p’ midpoint of the Daily-chart pattern A=42.89, B=34.34, and C=37.72. Slippage beneath the midpoint would therefore imply 29.17, the midpoint’s ‘D’ sibling. However, there is one more possible support where you could look for — and potentially leverage — a bounce: at 32.76, where trendline support would come in today on moderate weakness. ______ UPDATE (1:22 p.m. EDT): May 38 puts could have been covered anywhere between 5.75 and 3.70, so we’ll use the 4.50 midpoint as our price. Since we shorted them for 2.85, we’ll impute the 1.65 loss to the 2.35 we paid for the three Jun 40 puts that we still hold, bringing them to 4.00. We are also long 300 shares from 42.01. At current prices, the position loss nets out to around $1600. The position gives us the ability to short three June 40 calls without risk, since it would give us a “reverse conversion” that nets out to no position at all at June expiration. Accordingly, I’ll suggest offering three June 40 calls short for 3.70, good-till-cancelled. They are currently trading for around 0.80, so the stock would have to rally powerfully to get us filled. And, yes, this is much busier than I’d ever intended for a long-term hold.
We are short a single contract from yesterday’s high, 1358.25. The position can be carried with a cost basis of 1363.00 after we impute gains from a second contract closed out at or near 1352.75. As noted in today’s commentary, although we ordinarily implement a trailing stop when such positions go solidly in-the-green, in this case we’ll swing for the fences. A fixed stop can be used at 1358.50 for now, but we’ll hold off on a trailing stop until such time as the futures fall at least a hundred points.
Billionaire Rajaratnam Just a Poor Schmuck
by Rick Ackerman on May 13, 2011 12:57 am GMT · 37 comments
We harbored no illusions that Raj Rajaratnam was going to beat the rap for insider trading, but we were rooting for him just the same. The hedge-fund billionaire faces a possible life sentence after being convicted by a jury on Wednesday on all 14 counts of a case billed as the biggest insider-trading scandal of them all. The poor schmuck! Like some zoo specimen of ecopistes miratorius, the common pigeon, he seems so very unlucky for having been one guy among 10,000 quasi-criminals on Wall Street whom the Feds chose to make an example of. Now Rajaratnam will go to jail for crimes against no one in particular, even though many of his colleagues who stole directly from investors through deceit, misrepresentation and gray-area fraud will remain free and unaccused. And rich. Moreover, at the time Rajaratnam was trading on insider tips, there were so many trillions of dollars’ worth of funny money swirling in the financial ether that, however much of the grand sum he stole, no other investor could demonstrably have been denied his fair share. » Read the full article