Monday, October 1, 2012

I've put a stop-loss on our Apple call spreads, so check out today's tout for specific instructions.  Index futures were subdued Sunday night, but my hunch is that DaBoyz are eager to unload if any bids show up.

An 1808.30 rally target flagged here earlier is still very much in play. The 60-minute chart (see inset) shows the larger pattern that produced it, but also some minor external peaks whose breach, especially by an uncorrected thrust, would telegraph the final stage of the move.  Camouflageurs should look to get long on a pullback from above peak #2 (1781.40).  _______ UPDATE (10:37 a.m. EDT):  Using the one-minute chart and the advice above would have provided a nearly perfect entry opportunity off the following pattern:  A=11787.70 (8:40 a.m.); B=1782.80 (8:42 a.m.); and C=1780.90 (8:44 a.m.).  _______ UPDATE (October 2, 8:07 p.m. EDT): Night owls can try bottom-fishing the 1771.30 target shown with a stop-loss at 1770.90. This Hidden Pivot support is not quite perfection, since it coincides on the lesser charts with a visually obvious accumulation zone created on Monday, but it looks good enough to use without camouflage if theoretical risk can be held to just a few ticks. _______ UPDATE October 5): The futures dipped no lower than 1772.30, stranding our bid.  The fact that the pullback did not quite reach the target is a mildly bullish sign going forward.

Unlike Apple, Google barely flinched last week as the broad averages came down. A 773.69 rally target remains in effect if and when the stock takes flight again. From a camouflage standpoint, the best potential buying opportunity I can find on the lesser charts would use a 'timed buy-stop' on a fleeting pullback from just above the 757.99 peak shown. _______ UPDATE (October 5, 1:29 p.m. EDT): The stock gapped on the opening to a so-far high this morning of 774.38, achieving our target with 69 cents to spare.  That could be it for a while, but longs who caught a piece of the $14 rally should be on the sidelines now.  FYI, using the 3-minute chart there was an easy-as-pie 'camouflage' short from 772.92. It came on the 9:03 a.m. bar from the pattern a=774.29 (10:39 a.m.), b=772.00 (10:52 a.m.) and c=773.50 (11:00 a.m.)  All three coordinates are single-bar, with an impulse leg that breached the required internal and external lows.

The 1411.50 downside target flagged in Friday's update will continue to serve as a logical minimum price objective if its 'p' sibling at 1428.00 gets taken out.  The target is miles from any prior lows, and so it can be bottom-fished with a 1410.75 stop-loss. If the trade fills and survives for perhaps 15-20 minutes, check back here for further guidance.  More immediately, night owls can use the 5-minute chart if searching for a relatively painless way to get short via camouflage.  _______ UPDATE (10:30 a..m. EDT):  The futures went just a tick below p early Monday morning before trampolining 25 points higher.  If you were looking diligently to get long via camouflage, on the one-minute chart, 1429.25 at 1:36 a.m. EDT was the best place to have gotten aboard.

I've mentioned a couple of times that my Dow 14969 forecast was made with one foot out the fire escape window. With that in mind, we should pay heed to the fact that our bellwether of bellwethers, Apple, has not exactly come roaring back following last Monday's savage bull trap.  Although on Friday the stock did make an intraday low very near a 666.37 midpoint pivot as we might have expected, the subsequent bounce did not go very far.  Even more discouraging was that, by day's end, AAPL had relapsed to 667.03, presumably headed for a fall to the 650.57 'd' target associated with the midpoint. Accordingly, and just to be safe, I'm going suggest closing out the eight Nov-Oct 730 call spreads we hold for 7.00 if Apple trades below 666.37 (not 663.37, as erroneously given earlier).  The spread closed @ 7.37 on Friday, so it should be fairly easy to do no worse than scratch the trade if the stock is only moderately lower.  Keep in mind that if DaBoyz pull out the rug on the opening, causing the stock to gap down perhaps $5-$8 in the early going, it's a good bet that they'll run the stock back above 665.00 shortly thereafter._______ UPDATE (11:14 a.m. EDT): Exit the spread now on an offer of 8.00 or better.  With the stock at 674.85 at the moment, the spread is currently trading for around 8.20-8.35.  If you leg out, you should exit the Novembers first -- on the offer --since the Octobers are trading in a 3-cent spread and won't move as much.

Spain’s deflationary quagmire now lies well beyond remedy, dooming Europe’s bold but ill-conceived attempt to forge a political and economic union under a single currency.  That Spain’s collapse is imminent should be obvious to all by now, as the country attempts to borrow its way back to prosperity amidst 25% unemployment, savage budget cuts and a flight of capital to banks in England, Germany and elsewhere.  Recall that it was just two weeks ago that the world’s bourses wildly celebrated a German constitutional court's decision to uphold the latest bailout facility, the European Stability Mechanism (ESM).  Stocks and bullion rallied sharply on the news, acting as though yet more monetary pump-priming would somehow surmount the irresistible deflationary drag of the world's imploding, quadrillion dollar derivatives edifice.  In fact, the supposedly all-knowing, all-seeing stock markets showed themselves to be deaf, dumb and blind to fact and reality, since the court’s decision actually raised more obstacles to a bailout than it eliminated. (Traders have since repented, having given up nearly all of their earlier price gains.) Concerning the legal ruling, “the establishment of the ESM is about the only thing that the German court did say yes to,” our Australian colleague Bill Buckler noted in the mid-September edition of The Privateer.  “The rest of its ruling is a litany of the word NO!”  We quote the Privateer at length here, since Buckler appears to have been alone in describing what actually went down:  “In the first place, the court insisted that the German parliament must have a veto over any increase in Berlin's Euro 190 Billion contribution to the ESM. Any increase in that amount would require the prior approval of both houses of the German parliament. Oh, That EU Treaty... “Much more important," continued Buckler, "the court effectively vetoed any move