August 2009

Pay attention at your peril, since Gold looks like its trying to drive those who care most about it crazy. Yesterday's rally failed by a smidgen to hit our bullish tripwire, and that's why we should continue to use such benchmarks to filter out false signals. Scalpers can bottom-fish at _____ tonight, provided 946.20 has not been exceeded to the upside. Looking at the hourly chart, we'd need to see a thrust to at least ____ by mid-week to turn it bullish. Above that price, there would still be risk of a stall at ______, a Hidden Pivot, but a close above it would announce the test of $1000 we've all been patiently awaiting.  Regarding downside risk, I see none worth mentioning at the moment.

We hold two September 95 puts for 1.76 that we bought when the Diamonds rallied yesterday morning to within a single cent of our Hidden Pivot target, 95.82.  Continue to offer two Setpember 92 puts short against them for 1.40, good-till-canceled, but stop yourself out of the existing position if DIA touches 95.70 today.

I've laid out a strategy for those of you who stayed short the E-Mini-S&Ps, since this short position has the potential to turn into a big winner -- especially considering that our initial risk was only $63 theoretical. We'll also be attempting to bottom-fish in two mining stocks: Goldcorp and Moneta Porcupine.

Let's start building a calendar spread again, legging into the buy side first. I'd like to start with March 15 calls, but since there are none, we'll work on the _____ calls. Bid 0.50 fo four, 0.45 for six more, and 0.40 for another six, all good-till-canceled.  Once we lay in our inventory, we'll look to short _____ calls against it. 

Index futures were slithering higher Sunday night, prodded by DaBoyz to find out how nervous shorts are. Since U.S stocks have bucked an onslaught of selling in Asian markets lately, we should try to imagine how this dynamic might change if Asia shifts into neutral or even bullish gear.

Opportunity beckons, since the Diamonds are closing on a Hidden Pivot resistance at 95.82 that looks likely to cause a stall. Buy two September 95 puts (DAVUQ) if and when the stock gets there. I estimate they'll be selling for around 1.76 if you want to park a limit order with your broker, but you may be able to improve on that price by tracking the option bid/offer as the stock nears the target. _______ UPDATE (10:51 a.m. EDT): This one is working nicely so far, since the Diamonds have rallied to 95.81, a penny from the target, and the September 95 puts traded down to 1.75, a penny below where I'd suggested bidding. Officially, then, we hold two puts for 1.75. Use a fairly tight stop-loss for now at 96.07. FURTHER UPDATE (1:52 p.m.): Lower the stop-loss to 95.55 for the rest of the day, and at the same time offer two September 92 puts short for 1.40. The order is good as long as you hold the September 95 puts.

If Goldman falls without having bettered Friday's 164.90 high, you can bottom-fish a midpoint support at _____ with a stop-loss as tight as 15 cents. If the stop is hit, odds of a more serious correction to as low as 156.61 would shorten.

Gold was flagging lower Sunday night after Friday's spirited thrust, but buyers weren't giving up much ground. The so-far low of the pullback is 952.20, and if it holds, the futures could put bears on the ropes by vaulting a Hidden Pivot midpoint at _____ . That would suggest more immediate upside to at least _____. 

A Hidden Pivot target at 1027.50 first noted here on August 14 looks relevant at the moment, since Friday's high at 1026.75 came within three ticks of it. One above that number, however -- a prospect that is not exactly a longshot bet in this never-ending bear rally -- the next likely stop would be 1046.00, a target that comes from the daily chart (where A= 772.75, March 30). More immediately, a lesser target at1034.00 can be shorted by scalpers with a 1.25-point stop-loss provided it's hit in the first hour and 1020.50 hasn't been exceeded to the downside first. _______ UPDATE (10:56 a.m. EDT):  The futures have made a precarious top at 1034.25 exactly 57 minutes into the session.  If you shorted at my number, stick with the 1.25-point stop-loss that was given.