November 2008

A Hidden Pivot support at 766.50 identified here earlier is still my minimum downside projection for the near term, but another at 772.25 could also come into play. Either could be bottom-fished with a stop-loss as tight as 1.00-point. Alternatively, it would take a rally this week exceeding 927.25 to turn the hourly chart bullish.

A by-now ancient downside target at 25.95 remains viable, but any rally to its associative midpoint at 29.98 should be viewed as an opportunity to get short. A top occurring near this Hidden Pivot may not occur so precisely as we would prefer, and put prices will be exorbitant in any case. Accordingly, I'll suggest naked shorting two November 30 calls (QAVKD) if the Cubes touch 29.95. A stop-loss at 30.12 should be used initially, but I'll post further guidance in the chat room if the order fills.

We may have to raise the odds that Citigroup will survive the collapse of the banking industry. Clearly, any firm that can lay off 75,000 employees is gearing for survival in tough times. “We will be the long-term winner in this industry,” vowed CEO Vikram Pandit. Who could doubt such resolve? Even so, when the layoffs already announced have taken effect, the bank will still have 300,000 workers. That’s not exactly running lean and mean, but it would appear Pandit has left the door open for even more job cuts. “There is still a lot of rebalancing ahead of us,” he told employees at a closed meeting yesterday. “The coming year could be a difficult one for our clients and customers.” Citi shares have been falling relentlessly for 18 months, but they still have at least a little ways to go, according to our technical runes. The stock hit a 12-year low last week when it touched 8.27, but we’d be inclined to bottom-fish just a bit beneath it -- at 7.09, a Hidden Pivot support. Were the stock to reverse and hit 11.21 first, signaling a bullish “impulse” on the hourly chart, that would suggest that the recent bottom at 8.27 might turn out to be an important one. If so, it would hold bullish implications not only for financial stocks, but for the stock market in general, since bank shares have been a reliable bellwether for some time. How does that square with our prediction that the shares of Goldman Sachs, currently selling for around $62, will eventually trade for $29? Our guess is that Goldman would get a reprieve if Citi stops falling. But the hard choices Citi has been making still lie ahead for Goldman, whose global infrastructure continues to reflect the opportunities of a financially

Yesterday's 234-point decline looks like a meaningless blip on the daily chart, and you'd have to drop down to lowly the 15-minute bars to find anything to trade. There is in fact a midpoint support at 8234 that can be used as a minimum downside target for today, but it doesn't look reliable enough for bottom-fishing. If it's breached by more than 10 points, though, still lower prices would be likely, with 7895 as an outside possibility for today.

Someone in the chat room posted a downside target tonight at 7649 that looks like the best of an unappealing lot. The midpoint at 8282 has already been busted, so in theory we should be using 7649 as our minimum downside objective. In practice, however, any short to that number -- presumably initiated near 8282 -- would be subject to a nasty bounce from the visually obvious support of the three bottoms just below 8000 that were recorded in the last five weeks. _______ UPDATE: Surprise surprise, the futures opened soft after hitting an overnight high of 8281. YM may be able to fake its way above the pivot this morning, since DaBoyz are having some moderate success pumping buoyancy into Goldman, if not into Citi.

We'll continue to bid for some January 70 LEAPs of (2010) until we get them, since our downside target for the stock is much lower: 57.20. Today, bid 13.60 for a single LEAP, good only on the opening. ________ UDPATE: Lower the bid to 12.80, day order. These puts are going to be harder to buy than I'd originally thought. Apple opened firm, and one might therefore have expected that sellers would hit any put bid in sight. In fact, the LEAPs traded down only slightly, opening at 14.05. They do not trade like ordinary puts, probably, because their relatively low implied volatilities make them good as gold. That's because once you own one, it is easy to lock in a profit by spreading it off against much pricier put options due to expire over the next few months.

If you've been wondering how bad it could get for the shares of this world-class mediocrity and shameless peddler of digital swill, there's a Hidden Pivot target at 3.87, although it seems a bit farfetched right now, even to us. Still, with Windows 7 (aka Vista Service Pack 1) on the not-too-distant horizon, it's not inconceivable that investors could punish the company severely for taking a second called strike versus the competition (which at this point includes a resurgent AAPL, among others). If the firm didn't have $40 billion in the bank -- ah, but which bank!? -- we'd infer that 3.87 is a done deal.

Whatever illusions Americans may have about prospects for Change under Obama, they are about to be shattered by a Congressional bailout for U.S. automakers. Politics-as-usual all but guarantees that Washington will wind up throwing quite a bit more good money after bad -- not so much rescuing the car makers as postponing their day of reckoning for yet another six months, or perhaps a year or two at most. Democrats will vote overwhelmingly for the bailout, and Republicans will mostly oppose it. But in the end, General Motors, the squeakiest wheel among Detroit’s Big Three, will prevail with the argument that if Big Government does not pony up $25 billion pronto, countless jobs will be lost, along with any hope that GM, Ford and Chrysler will ever return to health. We’re all for fairy tale endings, but we doubt that many Americans are convinced that another $25 billion, or even a $100 billion, could turn the U.S. auto business around. Whatever the sums being tossed around, they pale in comparison to the expense not only of retooling factories and paring down the work force to perhaps a third of its current size, but of re-gearing the U.S. economy so that gas-guzzling, three-ton SUVs are no longer literally what makes America run. The automakers are implicitly promising that $50 billion would buy a radical shift in the way cars are designed and built. In fact, there can be no Manhattan Project for the automobile, since it’s not even clear what the goal of such a project would be. Are hydrogen fuel cells the answer? Electric cars based on a battery technology yet to be invented? Ultra light hybrids that would be great for commuting but lousy for a family ski weekend? No single answer is likely to suffice, and that is

It's been nearly two months since Comex Gold generated any promising impulse legs on the hourly chart. Instead, gold's bullish thrusts have been fleeting, with nary a hint of follow-through. We'd be mildly encouraged by a pop this week to 782.30, a tick above a small but crucial peak etched on the way down on October 21. But if it doesn't come, the 628.10 target broached here earlier will continue to retain its magnetic allure. More immediately, a midpoint Hidden Pivot support at 718.60 looks like the best place to try bottom-fishing with a tight stop-loss. Please note, however, that a decisive breach of the support would hint of further weakness over the near term to as low as 683.30.