Wednesday, October 3, 2012

Big Blue is closing on a long-term target at 215.19 that is clear and compelling (see inset). Let's try to leverage this Hidden Pivot target by buying four January 190 puts if and when the stock gets within 20 cents of 215.19. (I estimate that the options will be trading for around 1.55-1.65, but the price could rise if a strong rally forces put volatility higher.)  This order is good for the remainder of the week.  _______ UPDATE (8:37 p.m. EDT ):  An inside day has left my strategy unchanged.  _______ UPDATE (October 11, 2:59 a.m. EDT): It'll be quite bearish if IBM generates a downtrending impulse leg on the daily chart after having fallen $3.40 shy of our 215.19 target.  A print beneath the September 26 external low at 203.90 low (see inset) would do it.

December Corn has erupted with the most powerful bullish impulse leg we've seen in quite a while.  This could mean the monster bull move begun from about $5 a bushel at the beginning of the summer has gotten second wind.  For now, we'll use the 787^00 midpoint resistance of the pattern shown as a minimum upside objective. If it shows little stopping power, that would suggest more upside is possible to the 868^06 'D' target.

We've been using an 1808.30 rally target for December Gold for a while, but there have been relatively few low-risk opportunities to get aboard. If you're interested in an enticing speculation, check out the tout update for GCZ12, since it specifies a bid price and a very tight stop-loss, rather than camouflage, to initiate the trade.  You should also check out the trade recommended in IBM, since its a low-cost play with a simple execution plan geared to novice traders. (Click here for a free trial subscription if you want to get in on these plays with real-time guidance.)

In today's commentary, I said the Dow would turn menacing on an uncorrected drop below 13251.  For the E-Mini S&P, the equivalent shot-across-the-bow would become significant on a print beneath low #2 (1414.50). Eagle-eyed Pivoteers may have noticed that the #2 low on the Dow's daily chart is not a true low, since it is not preceded by the requisite peak. However, the low is quite legitimate here, as you can see for yourself. From a trading perspective, and most immediately, the futures will need to get past Monday's 1451.50 peak before they can break loose for a predicted run-up to 1477.50.  Night owls can attempt to get long via camouflage if this vehicle pulls back in b-c fashion from just above a 1443.75 peak visible on the 15-minute chart (10/2 at 10:45 a.m EDT).