Monday, April 9, 2012

DaBoyz were holding index futures in a very tight range Sunday night, trying to determine whether the opening bell is likely to bring a second wave of panic selling.  I've tailored my advice for our long position in the Mini-S&Ps accordingly.  There are also actionable plays in Gold and Silver, the latter with a three-tick initial stop-loss in lieu of camouflage.

I've suggested using the uptrend to get long via camouflage in June Gold, but because Silver's trajectory looks harder to leverage, I'll recommend bottom-fishing two contracts at the 31.665 midpoint support shown. (Note: This could change if 'C' goes higher.)  A three-tick stop-loss would keep theoretical risk close to our allowable limit on entry of $70 per contract, and while this might be cutting it too close, a 'camo' entry here would not be able to do much better. _______ UPDATE (12:33 a.m. EDT):  Sellers ignored the support, stopping out our position for a loss of $75 per contract. The easy move through 'p' telegraphed the weakness that was to follow.

It's speculatively bullish that last week's low failed by $4 to reach a clear downside target at 1608.80, but the rally would need to hit 1720.10 (!)  before we could bank on the intermediate term (i.e., 3-5 weeks). In the meantime, June Gold has taken a promising leap Sunday night in response to Friday's dour employment news. The rally has already triggered the 1642.40 entry signal for a leg to as high as 1659.20 over the very near-term. However,  it won't be until the 1648.00 midpoint resistance has been surpassed that the target will become an odds-on bet.  Note that there is a small window to get long via camouflage on the hourly chart, predicated on a B-C pullback following an apparent double top at 1649.50. From our perspective, it wouldn't be a double top at all, but rather a legitimate, bullish impulse leg.

We hold four August 23.63 calls @ 1.85 that are tied to a 1.65 stop-loss for now. Offer two of them to close for 2.25 while retaining the stop-loss on the full position.

Timely profit-taking on Friday has helped us weather an off-hours avalanche, but we'll still need to manage the risk of what remains of our position: long two contracts @1373.50. Accordingly, I'll recommend exiting a third contract at currrent levels of around 1375.50 and tying the last to a 1372.25 stop-loss.  The two-minute chart would be impulsively bearish on a print at that price, since it would exceed by a single tick the last "external" low short of Sunday night's so-far bottom at 1371.75. Finally, on a one-order-cancels-other basis opposite the stop-loss, offer the final contract to lcose at at 1385.50.  _______ UPDATE:  The stop-loss survived the entire session as the futures traded as high as 1382.75.  If you still have any contracts you're on your own, since the trade has grown too boring and labor-intensive for me. 

Stocks were struggling to get airborne late Sunday night after dive-bombing the tarmac Friday on news that the U.S economy had created a measly 120,000 jobs last month. Index futures traded just briefly on Good Friday before electronic markets closed at 9:15 a.m. for the holiday, but that was long enough for DaBoyz to take stocks down to fire-sale levels on near-zero volume. The E-Mini Dow futures plummeted 120 points in less than two minutes, setting the glum tone when trading resumed Sunday evening. However, our hunch is that shares will not go much lower on the opening, since the dirtballs who work the night shift are so good at shaking down the rubes on ostensibly bad news.  We say “ostensibly” because, for every trader who was disappointed that the alleged economic recovery appears to be losing steam, there were undoubtedly others who saw a new excuse for yet more Fed easing. A cynical calculation, to be sure, since everyone understands by now that even though the central banks have been running wide open for years, it is not benefiting employment, only stocks. Not that Wall Street cares.  Who needs jobs when it’s possible to promote runaway asset inflation with less effort and at a fraction of the cost?  Granted, that’s not the way Mr. Obama and his supporters on Capitol Hill would prefer it, since higher share prices alone are unlikely to fool voters come November. But for the time being, a rampaging stock market still holds the promise of reviving job creation and perhaps even of causing home prices to start recovering. We see neither happening, implying that the stock market could be on shaky ground. For even as Q1 earnings estimates have come down, down, down, the broad averages have barely paused for breath since late November.