Although we’ve been hearing that food purveyors have retained some pricing power in these deflationary times, it surely is not reflected in the performance of Kraft shares. Even so, a chart we received from a Hidden Pivot aficionado suggests that bottom-fishing near these levels could be rewarded with a strong bounce. There are three places that look worthy of a try: 22.25, 21.12 and 19.62. Our correspondent suggests the middle number, which is the Hidden Pivot target of the pattern shown. You can try it there with a stop-loss as tight 8 cents, but officially, I’m going to suggest bidding for two April 20 calls (KFTDD), day order, if and when the stock hits 22.25. That is the target of the long-term pattern labeled A’-B’-C’, and the first place whence we might expect a strong reversal. The calls should be selling for around 2.40, if you want to park a limit order with your broker. Stop yourself out if the stock trades below 22.00. _______ UPDATE: Cancel the order. Kraft shares suffered a nasty whack on the opening, but the gap selloff still left it a dime shy of our target. The stock has bounced since, but a relapse down to the target would present a less attractive buying opportunity than if the target had been hit the first time around. (Further Note: The relapse came down to 21.19 — 7 cents from the second target but still not close enough to trigger a trade. I’ll suggest waiting for 19.62, perhaps bidding a dime above it to make certain we get filled. If Kraft does make it down that far it would be an excellent buying opportunity, less speculative than buying at either of the first two pivots in our target sequence.)
