November 2008

Let's not beat our heads against the wall trying to bottom-fish pivots all the way down to $628. For Gold to signal a meaningful turn, we should require no less of it than a print at 782.30, a tick above a minor peak along the wall of October's steepest downward pitch. (See chart) It is not important how long it takes for the futures to accomplish this; the key is that the small segment of the rally from peak #1 to peak #2 be unbroken on the 60-minute chart. If you're looking for a hair-trigger signal for today, use 718.20, whose significance can be discerned only on the 1-minute chart.

Citi is all but guaranteed to hit 7.75 (or 7.09 if any lower), and soon, but as we have learned over and over again in this stock, that doesn't necessarily mean we can make money shorting it. I have no strategy to suggest for the opening, since opening-rotation prices rarely favor the retail customer. However, if Citi begins the day with a moderate rally, you might want to have a stink bid in for some December 12.50 puts (CXZ)._______ UPDATE: Citi did open higher -- on a 25-cent short-squeeze gap to 9.90 deftly orchestrated by the world-class sleazeballs who manipulate this stock for a living. The rally then collapsed 15% to a so-far low of 8.51. If you shorted the opening as suggested, cover half at these levels and use a stop-loss at 8.68 for the rest.

A breach of the 9.410 support flagged here earlier suggests more downside over the near term to at least 8.865, a Hidden Pivot support. Alternatively, a meaningful reversal would require a thrust touching 9.995 (and the sooner, the more bullish).

The 25.95 target given here yesterday looks where the Cubes are headed, but if they rally up to its associative midpoint, 29.98, before deep-sixing, that would be a logical place to get short.

In the world of risk-takers, Steve Wynn is in a class by himself. We’ve heard of commodity traders bragging about how their account balances would swing $50 million in a day, but they’re just pishers compared to Wynn, who has gambled fifty times that on a business deal. Moreover, if a soybean or bond position blows up, a trader can unload the whole mess in an afternoon and start over. Wynn, on the other hand, has nowhere to run. Of course, any guy who builds a billion dollar casino in the middle of the Nevada desert, then puts a lake with a thousand dancing fountains in front of it, is not exactly thinking about an escape route. Far from it �' even now, with the worst U.S. economic downturn since the 1930s threatening to crush casino operators in Las Vegas and elsewhere. Is Steve Wynn hunkering down, bracing for disaster? Far from it. In fact, he is putting the finishing touches on Encore, a $2.3 billion resort that will take opulence to new extremes even by Las Vegas standards. We first came to admire Wynn when he turned up in our home town of Atlantic City, ready to wheel and deal after New Jersey voters approved casinos in 1976. Wynn bought the property that was later to become the Golden Nugget from Manny Solomon, a popular local hotelman who had fallen on hard times through no fault of his own. Solomon had been forced to take back his Strand Motel in bankruptcy after the guys who’d bought it from him a couple of years earlier ran it into the ground, stealing the televisions and furniture on their way out the door. When the Vegas casino mogul walked in off the street one day, wearing sneakers and painter’s overalls, Solomon could

Yesterday's short-squeeze racked up 300 points in the space of just 60 minutes, so we should not assume that the bozos doing the buying are now so completely cured of anxiety attacks that they could not do it yet again today or tomorrow. That said, it should not go unnoticed that the literal height of yesterday's hysteria failed to surpass the look-to-the-left peak shown in the chart. That is usually a reliable sign that buyers lacked the guts to turn a phony short-squeeze into something we might have to take more seriously.

We'll continue to use 887.50 as the threshold at which jeopardy to as low as 766.50 would threaten. Yesterday's decline penetrated the support by five points, but that is a permissible margin on the weekly chart whence the number came. To repeat: It would take a two-day close beneath 887.50 before we'd become seriously concerned. More immediately, the futures looked eager Tuesday night to probe a minor midpoint resistance at 903.25. Any higher would hint of upside potential over the near term to as high as 920.00. _______ UPDATE: With the futures currently at 861.00 off an 850.50 interim low, here's a sequence of HP supports you can use for tightly stopped bottom-fishing or to gauge the strength of the downtrend: 859.75, 851.00, and 837.25.

The promising uptrend begun via a short-squeeze thrust on October 28 looks close to sputtering out, but we'll reserve judgment until we've seen how GDX performs on retracements. The current one should go no further than 20.14 if we are to assume the best, but certainly no lower than 19.58 if the two-week-old bull trend is to stay alive. The best place to attempt bottom-fishing today lies along the path lower, however, at 20.43. Officially, we'll do so by buying two December 23 calls, stop 20.29, when the stock reaches the target. At the moment, I cannot estimate within 5 cents how much the calls should be selling for with the stock trading around 20.43, but keep your bulletin launcher switched on if you're interested in the trade, since I'll put out price guidance in real time if it looks like it could be crucially useful._______ UPDATE We stopped ourselves out of the calls for a small loss when the stock dipped 15 cents below our buying point. GDX is tenuously holding above 20.14, having touched a low today of 20.10. A two-day close below the support would be a serious negative for the near term, but in any event, GDX apears to be fighting for its life.

A Hidden Pivot support at 187.31 looks clear and compelling, so we should use it as a minimum downside objective for the near term. A sharp bounce from that number would be bullish and unsurprising, but any significant slippage beneath it, especially within minutes of the first time it is touched, would be a very negative sign. What makes the down-pattern so enticing is the fact that its point 'B' exceeded two "external" lows to the left. _______UPDATE The easy breach of 187.31 foretold the weakness that followed. Now, if the HUI fails to hold above a Hidden Pivot support at 182.69, it would hint of more downside to at least 167.82. Anything below that midpoint pivot, and, hey, you really don't want to know. The coordinates off the hourly chart are A=268.06 (October 14); B=150.27 (October 24).