June 2009

We'll be able to ponder in real time whatever excitement Wednesday brings, since there's a tutorial session scheduled for 11 a.m. EDT.  The E-Mini S&P was playing peek-a-boo shortly before midnight, but it looked more like disguised strength than weakness to me.

Bulls looked powerless yesterday to reverse a downtrend that has been alleviated only by short covering for a day-and-a-half earlier in the week. The futures would need to push above _____ by week's end to suggest the Plunge Protection Team is doing its job, but otherwise they'll have their hands full just trying to keep this barge afloat.

We don't have to chase the July 12.50 calls, since the position we have on already -- long four September 10-June 10 calendar spreads for a 0.10 CREDIT -- is all but certain to produce a profit no matter what.  However, just to fatten our odds, I'll recommend bidding 0.30 for four July 12.50 calls today and leaving the bid in for the entire session. Concerning the stock, yesterday's tedious dither looked like consolidation for a push to 11.08, the nearest Hidden Pivot above -- a minor one to be sure.

The rally pattern shown in the chart projects to _____, although I wouldn't bet the ranch on it. That's because the point 'B' of the pattern is pure sausage, having failed to surpass anything to the left of it. Still, our target will do just fine for a minimum upside projection in the midst of a runaway buying binge. Night owls looking for a stealth buying opportunity will need to get down on the 1-minute chart to find a savory allotment. As of around 11 p.m., there was a downside target at 937.00 (a=945.50 at 3:56 p.m. EDT), but it looked ugly even by my taste, and it also lay within a tick of the day's key low.

As of around 10:35 p.m., the futures were showing little of the feistiness that propelled them so vigorously from Tuesday's lows; however, neither were they backing off in repentance of the rally. Moreover, once they get second wind, we should look for the push to reach _____ at a minimum, or _____ if any higher. For night owls looking to get on board, there wasn't much in the way of handholds. I've included a chart that shows a possible one, although sellers are showing some reluctance at the moment to complete the abcd correction in the way we might wish.  A pattern of similar subtlety is what you'll need to get long with relatively little risk.  

Will investors have one more chance to buy gold for the relative bargain price of $900 before it takes off? We'll get to that in a moment, but let me mention first that loading up on gold when bullion is moving higher needn't be painful and fraught with risk. Consider the following futures recommendation that went out to Rick's Picks subscribers early Monday evening. It missed the overnight low by just 10 cents, allowing traders to buy a single tick off the bottom. Here's the recommendation exactly as it was disseminated at 8:01 p.m. EDT:  "The futures sold off hard after making their high early in the day - but then, when haven't they done so?  The important thing is that buyers had no trouble pushing the August contract past a Hidden Pivot resistance at 985.80 noted here earlier. Night owls should put a stink bid in at  970.60 stop 969.90 and keep your fingers crossed." As you can see in the chart above, August Gold bottomed at exactly 970.50 overnight - a tick below the forecast -- before embarking on a spirited $18 rally. A trader who followed the recommendation exactly would have enjoyed a highly favorable risk:reward ratio on the way up, since the maximum gain on the trade was 25 times the amount, in theory, that was risked initially. Beating Predators Incidentally, off-hours trades like this one are not strictly for scalpers, since they can be used by investors seeking to adjust long-term positions. I hesitate to say that night markets make easy pickings, because they most surely do not. They are in fact dominated by some of the most talented sleazeballs in the business - skilled predators whom you would not want to sit down with at a poker table. But when it comes to trading,

I was skeptical a few months ago when Karim Ghaidan, a Rick's Picks subscriber and veteran institutional trader, provided some extremely bullish forecasts for stocks and crude oil.  In retrospect, it is clear that nothing less than "extreme" bullishness was warranted, since stocks and crude have both rallied spectacularly from their lows. I asked Karim for his current outlook, which he has graciously offered to share.  Here's his response, dated May 29: "Please note the shape of the yield curve: It is getting more and more steep quickly (short-term, too quickly). The FED can influence only the short end, with the long end determined by the market. This is intermediate-term inflationary (i.e., for the next 6-8 months) before it flattens dramatically. What does this mean for stocks?  Over the immediate short-term (i.e.,  one month) stocks will fall, with the  S&P's reaching into the 840's. This will result in TLT [Lehman 20+ Year Treasury Bond Futures, currently trading for 91.48] back above 100;  gold falling to the low 900's; VIX back above/near 40, and the U.S. dollar could rally. "Medium-term (late summer/early autumn): S&P will rally to approximately 1300;  U.S. dollar will fall to the low 70's;  gold will initially rise to nearly 1,100 before falling back to 950 before rallying to 1,500 (this is not intended to be exactly precise), VIX will fall to mid teens; GDX will double from current levels and yield curve will be even steeper. "Subsequently: A slow grind lower for S&P to 400;  U.S. Dollar will rally; VIX will hit new highs as will TLT, as only then deflation takes hold. The present [very difficult economic environment] will be viewed with nostalgia. "I am presently very long UNG, short S&P, long TLT.  Long ladder of orders to re-enter gold and GDX. UNG [a natural gas

We should be doubly diligent when a trading vehicle appears to obliterate an important Hidden Pivot target, since we don't want to be caught unawares by an important turn that comes from the "wrong" place. In this instance, subtle but potentially meaningful signs of strength would come on a thrust exceeding _____ today. That would surpass a peak made on yesterday's head-fake opening, turning the hourly chart bullish in the process. If DXY move lower in line with expectations, however, the first Hidden Pivot support of significance that it will encounter lies at ____, just 0.03 points above ____ key low. There are therefore two important supports at that level, implying that a breach in one fell swoop would be quite bearish.

As you can see in the accompanying chart, Goldman was just marking time yesterday, presumably setting the hook for any bears who may have taken comfort in the stock's laggardliness. Not a single prior low was breached by the $4 selloff, and the stock went bounding into the close.  Concerning the 151.24 rally target mentioned in today's commentary, the slightly adjusted, correct target is ____. I've included a chart that shows its provenance for anyone needing to be convinced. The Hidden Pivot midpoint of the pattern is _____, so any pullback to that price today or tomorrow should be viewed as a buying opportunity. Incidentally, if Goldman makes short work of _____, it would become a good bet to run an additional 5 points to _____, the target of a larger pattern also shown in the chart.