Friday, July 15, 2011

Since bottoming on June 4, Google has generated the kind of impulse leg that could keep it buoyant for the rest of the summer.  The rally exceeded no fewer than five "external" peaks on the daily chart without pausing for breath, a feat that will allow the stock to take its sweet old time consolidating the move in the days ahead. Let's try to leg on a bullish butterfly spread by buying a call if and when Google falls to a Hidden Pivot support at 518.82. The target can be found on the 15-minute chart, where A=550.68 on July 7.  Buy one September 600 call, using a stop-loss at 518. 20.  Pay no more than the midpoint of the spread, since it is extremely wide. _______ UPDATE (9:16 p.m. EDT):  Astounding! We thought that a $595 quote that flashed on our screen was an error. Evidently not. Earnings released after the close were so impressive that the stock is currently in the throes of a murderous short-squeeze to $600 -- up nearly $70 over the day session close.  So much for the call options we might have bought for around $6; they'll be trading for at least $25 come morning.

While gold teeters on the edge of a potentially worse-than-minor pullback, September Silver has already crossed the threshold and nearly reached the 'd' target of an abcd correction. It lies at exactly 38.000, just 18 cents beneath the so-far low of the selloff from yesterday's high at 39.395.  A penny could make a difference here, since there's an external low at 38.010 that would be exceeded if the target is reached. That would create a bearish impulse leg of minor degree but still sufficient to warrant our attention and concern.

It wouldn't take much to turn the short-term picture bearish for Gold.  Check out the chart that accompanies today's August Gold tout, since it shows precisely what it would take to put bulls on the run.

The futures look a little toppy, so we shouldn't let a still-unachieved target at 1597.80 distract us if there's a hint of an impending swoon.  The hint would come by way of the creation of a minor, bearish impulse leg, or perhaps the breach of a midpoint support on the lesser charts. The accompanying chart shows exactly what I mean, since August Gold's correction from yesterday's high has stalled within a single tick of a minor midpoint support at 1584.40.  Were it to give way, a leg down to at least 1577.70 would be a likely result, crashing no fewer than one "internal" low and two "externals. That would most surely turn the short-term picture bearish, putting bulls on the defensive when the new week begins.

Yesterday's gratuitous price hump left a 1280.50 downside target intact.  Odds that it will be reached today or Monday have shortened now that its sibling midpoint support at 1304.00 has been decisively exceeded.  Traders can bottom-fish with a stop-loss as tight as 1279.75, since the target is not only clear, but located "in the middle of nowhere" just as we prefer.  Pivoteers take note: Leveraging a "camouflaged" turn on the lesser charts will nearly always be the less risky way to play.

Shouldn’t we be very afraid when Nancy Pelosi thinks she can live with Mitch McConnell’s deficit reduction plan?  Actually, it’s worse than that: What Pelosi in fact said is that anyone rooting for an increase in the debt ceiling should be saying “bravo to Senator McConnell.” Uh-oh. Somehow, “bravo” wasn’t the word that sprang to our lips when this story crossed the wire.  Nor are we even sure which side to take, since both parties were poker-faced yesterday on the matter of just what it is that they think they might be able to agree upon. It would also appear that taking the side we had thought House Speaker Boehner was on – “More taxes? Over my dead body!” (or something to that effect) – may no longer be an option. How could it be after Mr. Obama has invested so much time and energy demagoguing the filthy rich – i.e., anyone making more than $250k? At times like this, we look to Sen. Harry Reid to point the way…so that we can bolt in the opposite direction. Again, no clues. The Nevada senator continued to vilify House Majority Leader Eric Cantor, stopping just short of insinuating that Cantor’s mother may have worked in a Mexican brothel and that Cantor himself might have just one testicle. But that was just Reid being Reid. With respect to the political football, he did what he always does: wrap himself in the flag, the better to warn that GOP stubbornness is threatening to halt Social Security checks, veterans benefits and paychecks to our troops. That there is not a dime’s worth of difference between Democrats and Republicans on Capitol Hill is a recurring theme in the Rick’s Picks forum. Even though there is some truth to this, we’d rather take our chances with