Tuesday, November 13, 2012

With bankers, teachers and other public employees taking a well-deserved and much needed three-day holiday due to Veteran's Day, Wall Street marked time yesterday. Among the few stocks that did move -- nicely, as far as we were concerned -- was Facebook, which paradoxically may be responding to more-sincere overtures from the same dirtbags who goosed it on October 24.

We hold eight December 40-45 call spreads for free -- and a good thing, too, since I'm at the point of averting my eyes lest this stock, with its by-now gratuitous feints above $40, annoy me any more than it already has. Yesterday's dirge pointed down to at least 38.72, but any lower could turn recent, important lows at 38.40, 37.39 and 36.33 magnetic. Despite all this, the weekly chart is struggling to make hay with an indisputably bullish impulse leg (A=36.33 on 9/28; B=40.91 on 10/5) that projects to 41.97 -- 67 cents above the recent high. Please note, however, that it would be quite bearish if a negative impulse is generated without that target having been reached. For that to occur, the stock would need to fall uncorrected past 'externals' at 37.39 and 36.33. _______ UPDATE (November 15, 9:55 p.m. EST): Yesterday's nasty slide was the death knell for our bull spread, which fortunately cost us nothing. Both of the 'externals' noted above were breached, leaving us hoping that whatever rally lies ahead will be easily shortable.  If we can't make money being long this stock, then we might as well go with the flow. ________ UPDATE (December 5, 9:36 p.m. EST): When it hit 35.84, the stock signaled more downside to as low as 31.20. It'll have a last chance to turn around from 34.29, the midpoint support; or from just beneath November 16's 34.78 low, where some stops are likely to get run. _______ UPDATE (12:25 p.m. EST):  The next day, the stock made its turn from -- surprise, surprise -- 34.79, embarking on a manic tear to 38.42 that with today's plunge is starting to look like just another bull trap. This stock has been such an annoying little piece of crap that perhaps the

Georges van Hoegaerden, CEO of The Venture Company, is an out-of-the-box thinker whose e-mails are both provocative and enlightening.  His latest, which bears the headline above, refracts a theme that will be near and dear to the hearts of some who frequent the Rick's Picks forum.  A quote from Goethe contains the essence of it: None are more hopelessly enslaved than those who falsely believe they are free. – Goethe To read the full essay, click here.

[Monday's constipated price action changed nothing that was addressed in the commentary below. Perhaps with Veteran's Day, a national holiday not observed on Wall Street, behind us,  the markets will reveal a bit more about their post-election, pre-holiday mood as the week unfolds. RA] The broad averages and some bellwether stocks that we track achieved some important correction targets very precisely on Friday. Now, however, shares will have to rally robustly from the lows to avoid a further, possibly nasty drop into year’s end. A week ago, we used Hidden Pivot Analysis to drum-roll a potentially important low in Google at 650.69. On Friday, the stock bottomed at 650.30, just 39 cents beneath our target, then trampolined $18.  The powerful rally from exactly where we’d expected is a tentatively bullish sign. However, if GOOG should relapse beneath the support even slightly, more downside to at least 605.83 would become likely, according to our proprietary technical method. If this does indeed occur, the sooner it happens, the more bearish the implication would be for the remainder of 2012.  Because Google is so heavily owned by institutions and carries such heft in the Nasdaq index, any weakness in the stock could drag everything else down with it. We should mention that the S&Ps did almost exactly the same thing last week as GOOG.  With the E-Mini S&Ps having traded as high as 1431.75 a few days earlier, we projected a swoon from 1408.00 to at least 1364.25 -- a plunge equivalent to about 350 Dow points. This is in fact what occurred, just after we told subscribers to get  short at 1399.25. The actual low at 1363.50 on Friday came at 8:10 a.m. EST, about 80 minutes before the opening bell. The futures subsequently catapulted to an intraday high of 1388.00 before