Thursday, October 18, 2012

The futures are entering their third week of a corrective move that targets 1732.30 most immediately.  That's a Hidden Pivot midpoint support, and its 'd' sibling at 1709.70 would be in play if it's exceeded by more than 40 cents.  For bulls to regain the initiative would require a thrust exceeding 1758.40, an external peak whose significance is clear in the accompanying chart.

Perhaps we'll have a chance to get short at 23.70 after all.  If the stock rallies to within five cents of that number -- a promising Hidden Pivot resistance -- plan on buying eight January 22.50 puts. I estimate that they'll be trading for around 0.53 then, but allow for a range of 0.51 to 0.56 (paying no more).  I've included a snapshot of an option calculator into which I've plugged a 22 volatility that yields a theoretically fair price for our puts. According to Tradestation, that's the actual implied volatility right now for the January 22.50 puts, although far-out-of-the moneys well below that strike are trading at four times that level. What this implies is that we'll get great leverage by shorting puts of a lower strike against our position if GE falls after hitting the 23.70 target.  _______ UPDATE (October 23, 3 a.m. EDT): The stock got sacked for a 4% loss on Friday, but I'll let the trading recommendation stand for now, since Monday's commentary raises the prospect of AAPL turning the market around this week.  _______ UPDATE (11:31 p.m. EDT): We'll put aside thoughts of shorting into strength at the moment, since this stock has come down hard with all the others in recent days.

It's time to give up on getting short at 215.19, a once-promising Hidden Pivot target that will now be a long time in coming, if ever it does come, following yesterdays savaging of Big Blue in particular among the tech stocks. The move was impulsively bearish on the daily chart, meaning bulls will have to wait for a 'p' midpoint to form on the C-D follow-through leg down if they are going to try and save the day/week/month/year.

Google's failure to correct all the way down to a Hidden Pivot target at 722 (see inset) is tentatively bullish and would be confirmed by a short upthrust exceeding 762.20, the higher of two external peaks shown in the chart.  That would create a promising impulse leg on the hourly chart -- one with enough power, presumably, to end the two-week presumptive consolidation that has followed October 5's all-time high at 778.  A low-risk 'camo' buying opportunity would beckon if a fleeting rally were to slightly exceed peak #2 and retrace in b-c fashion.

Fedex left the launching pad without us yesterday -- a bullish lurch that implies business in America will remain buoyant at least through the holiday period.  Check out the chart accompanying today's FDX tout if you want to see how much more upside it would take to clinch it.  Click here for a free trial subscription.

The stock has taken off without the tradable curtsy we'd wanted. Now, uptrending ABC patterns of many degrees are driving the rally, implying that business in the U.S. will remain buoyant, at least, for the foreseeable future.  If the buying continues today, exceeding an external peak at 93.29 recorded on March 26 (see inset), it would clinch the bullish case for the near-to-intermediate term. ________ UPDATE (11:24 p.m. EDT):  Thursday's strong rally hit 94.26, demonstrating that bulls are in charge of this stock even with the broad averages languishing. _______ UPDATE (October 22, 3:02 a.m. EDT): FedEx is still the strongest of the bellwether stocks I am monitoring. To maintain its relative strength, however, will require an impulsive thrust today on the 'hourly' that exceeds 93.70.  _______ UPDATE (October 23, 12:41 ap.m. EDT):  The stock is showing excellent relative strength today relative to a Dow Average that is down 230 points.  In the end, however, FDX, together with Apple, seem unlikely to sustain a stock market than appears to be running dry on earnings.

We hold 200 shares with a profit-adjusted cost basis of 23.37.  Please note that any histrionics falling shy of 22.46 to the downside or 25.50 to the upside should be regarded as mere noise. The significance of these price points is shown in the chart, but the explanation is that either type of move, if uncorrected, would create an impulse leg on the intraday charts. ______ UPDATE (1:39 p.m. EST): Exit the position now near 22.51, since today's rout was bearishly impulsive on the daily chart. I have disseminated this advice via e-mail and in the chat room as well. Our trading loss was about $175.

[In his latest report to clients, below, Boulder-based financial adviser Doug Behnfield sees a tough economy ahead no matter how the election turns out.  Doug is optimistic that the new Congress will finally move toward resolving a debt crisis that has held the economy in stays since the Great Financial Crash of 2007-08.  The bad news is that this will induce an economic coma from which it will be difficult and painful to emerge. RA] Here comes the 4th Quarter! I suspect it will be action-packed. With one month to go before the election, it is a tight race and much of the investment commentary is focused on how the possible outcomes will affect the markets. Perhaps it all comes down to fate (n. 1. the power or agency supposed to determine the outcome of events before they occur; destiny). We should have a better idea whether gridlock will continue or legislative progress will be made in the effort to get the federal budget under control. The two movie scenes that come to mind are Thelma and Louise and Indiana Jones and the Last Crusade. I am pinning my hopes on Harrison Ford. The outcome will probably be more a function of how the congressional elections wind up than who wins the presidency. I am optimistic that, through a combination of “political capital” in the Oval Office and a Congress that can legislate, the country will move forward in the battle against the fiscal crisis. However, if investors perceive the likelihood of progress, the response in the markets could be negative. That is because whatever the combination of tax increases and spending cuts, the impact on the economy is likely to be depressing. Baby Boomer Demographics Nobody ever said paying the piper would be easy. The sacrifices that will be