U.S. stocks showed unbridled enthusiasm yesterday for the changing of the guard in North Korea, tacking 337 points onto the Dow Industrial Average. Could heir apparent Kim Jong Eun be the Man of Peace the world has been waiting for? It sure looked that way on Wall Street, where a wave of optimism about something fabulous swamped sellers from the opening bell. Even if the young Kim – reportedly a huge basketball fan like his dad — merely slows North Korea’s mischievous transfer of nuclear weapons technology to Iran’s mullahs, jihadists and terrorists around the world, it would be the best Christmas present our crisis-fatigued planet could receive. Small wonder, then, that North Koreans were sobbing in the streets as they grieved the loss of their Dear Leader. And very dear he must have been, to judge from the tens of thousands of mourners who lined up for hours to pay their respects as Kim Jong Il lay in state, ensconced in a glass-covered coffin. Was he smiling when he died? We couldn’t tell looking at the picture below, although we won’t be surprised if a future biographer reveals that Kim, who’s name means “regal hill,” was a world-class kibitzer in private. » Read the full article
Gold and Silver futures are in uptrends Tuesday night that could generate opportune ‘buy’ signals. To assist you in getting aboard with as little risk as possible, I’ve sketched out detailed scenarios that show how these trends might be traded.
Should I mention that yesterday’s 337-point rally was not impulsive on the larger intraday charts? Check out the 240-minute bars if you don’t believe me. Another measly 31 points would have done the job, but it looks like the panic-stricken shorts who powered yesterday’s wilding spree just didn’t have it in them. My hunch is that the rally will prove to have been a one-and-a-half-day wonder after bears have done their puking Wednesday morning. Still, because the daily chart actually is impulsively bullish, we’ll have to treat the expected pullback with the same deference today’s commentary has accorded Kim Jong Il. Allowing for the most bullish scenario I could possible see over the next eight trading days, my maximum rally target would be 12760, subject to midpoint interference at 12248.
The stock’s stall two weeks ago near a 1268.66 midpoint resistance shown suggests it could get to 1354.32 on a breakout. Although we cannot predict with confidence if or when this will happen because PCLN has been meandering sideways for the last five weeks, as a riskless play I’ll suggest buying the August 16 1340-1350-1360 call butterfly spread for ‘even’ 32 times. This means you would short two 1350 calls, buy one 1340 call and one 1360 call for no debit or credit. In practice the easiest way to do this will be to buy the 1340/1350 call spread 1:1 at targeted swing lows, and to sell the 1350/1360 call spread 1:1 at targeted highs. If you do either and then get a move your way of as little as perhaps $2.50, legging into the ‘fly for free (or even a small credit) would be relatively easy. The maximum profit on this position would be 32 x $1000 = $32,000, although in practice we’d be doing well to come away with half that much if the stock were to rally to 1350 by August 16.
The futures looked like they could go either way as Monday’s session drew to a close. However, the stall within 0.70 of the 1318.30 midpoint resistance I’d flagged implies that a decisive move past it would reach its D-target sibling at 1331.60. Alternatively, my worst-case target for the near term would be the 1278.20 Hidden Pivot support in the lower-right quadrant of the chart — or possibly even 1271.70 if any lower. The accuracy of this target would be affirmed by a bounce, possibly tradable, from within two or three ticks of the 1302.00 midpoint support. ________ UPDATE (9:57 a.m. EDT): Gold has bounced $14 this morning from a low just two ticks (0.20) from the 1302.00 midpoint pivot flagged above. Now, if the futures breach the support, we’ll know EXACTLY where they are headed.
Crude futures have been pretty whacky lately, but not so whacky as to fool us if we are monitoring the lesser charts. Notice that the recent high fell within 23 cents of the 103.71 target. Although we usually allow 21 cents of leeway, this is still close enough to affirm that price action in this vehicle is both predictable and tradable. Accordingly, traders can use the downtrending abc shown to bottom-fish at either the p=102.71, or at D=102.09. If the bull trend begun from last Tuesday’s low is going to continue, we should see the upward reversal occur from p or very near it. Please note that despite crude’s recent plunge, I still have significantly higher targets outstanding, the first of which is 109.21, basis the August futures. _______ UPDATE (4:12 p.m. EDT): Wowie! The futures trampolined $2.22 from within 6 cents of the 102.71 correction target flagged above. If you caught a ride from near the low and still hold contacts, please let me know in the chat room so that I can establish a tracking position for your further guidance.
Netflix’s so-far $37 selloff has followed a peak last week at 475.87 that slightly overshot a Hidden Pivot at 474.50 I’d characterized as ‘a big-picture target where an important top is even more likely.’ A chat-roomer who evidently took this prediction to heart reported buying puts last Thursday for 1.24 that he cashed out for 8.90 yesterday. This could be just the start of NFLX’s comeuppance for all those who inflated this gas-bag to undeserved heights. If you took a position and are still holding it, please let me know in the chat room and I will update guidance. For now, though, let me suggest that you take profits on half of any short position entered near the recent top. _______ UPDATE (July 10, 10:23 p.m.): Bears failed to achieve a Hidden Pivot target yesterday, presumably because DaBoyz shook the stock down so hard on the opening bar that it exhausted sellers prematurely. The missed target suggests that traders will enjoy decent odds bottom-fishing the midpoint pivot shown at 433.62 (see inset, a new chart) with a stop-loss as tight as 8 cents. If it’s hit, expect the selling to continue down to at least 423.05, a Hidden Pivot that can be bottom-fished with as tight a stop-loss as you can abide. _______ UPDATE (July 14, 11:07 p.m. EDT): A turn from 428.20, precisely between the two pivots flagged above, left our bid high and dry. The bull leg that has followed could be the start of a rally cycle with the potential to reach 486.86. First, though, let’s see whether buyers can tackle a midpoint pivot at 457.53 that is associated with the target. _______ UPDATE (July 16 at 6:47 p.m.): Let’s not overlook the downside — specifically, the 433.69 midpoint pivot and its D sibling at 411.67. Bears can short the break for a move to either, and both can be bottom-fished with the tight stop-loss you can abide. ______ UPDATE (July 22, 12:15 a.m.): The stock turned higher from $2 above the midpoint support, implying that bulls are about to dominate once again. Call prices are on the moon, however — way too expensive for a straight directional bet. Instead, I’ll suggest buying the August 2 – July 25 calendar spread eight times for 1.50, day order, contingent on the stock trading 451.00 or higher. Please report any fills in the chat room. _______ UPDATE (July 22, 12:05 p.m.): With today’s huge air pocket, the stock obviously remains in the grip of DaBoyz. My assumption will always be that steep declines in NFLX are brazen shakeouts, engineered by strong hands to steal stock at fire-sale prices from weak hands. In this instance, the downdraft appears likely to hit 413.96 before DaBoyz run it up again. If and when that number is hit, you can bottom-fish there with the tightest stop-loss imaginable.
The Dollar Index turned higher yesterday an inch from a correction target that had been three weeks in coming (see inset). This portends a bullish change for the intermediate term. The actual target is 79.74, and there is always a chance it will be breached. If so, there’s an alternative target at 79.62, but if it fails as well, especially without a fight, the implication would be more slippage to as low as 78.91, where a key low recorded in early May would thereupon beg to be tested. _______ UPDATE (11:17 p.m. EDT): Yesterday’s low occurred at 79.74 exactly. If the dollar is about to reverse and move higher, it will have to happen here, and now. _______ UPDATE (July 9, 2:33 a.m. ET): The dollar rallied strongly for a few days, but it is still not out of the woods because the move narrowly failed to clear an important ‘external’ peak at 80.38 recorded on 6/26. _______ UPDATE (July 16, 6:55 p.m.): DXY came within an inch of a clear and important Hidden Pivot rally target at 80.60 yesterday (see inset, a new chart). However, it will have to push past it to imply that the rally from the July 1 low (which had been predicted to-the-penny) is more than just a flash-in-the-pan.