December 2010

In today's tout for February Crude I've identified a minor target at 94.51 that should act like a springboard to $100. A higher target still, at $111, was noted here earlier, and so "expert" predictions of $3.50 gasoline by summer seem pretty stupid, since those prices are going to be coming to your neighborhood by...February?

I've already identified a big-picture target at $111, but for now let's focus on the 94.51 target of the lesser pattern shown in the chart.  Since the geniuses on Wall Street seems to think too much bad news is never enough, the prospect of $4.00-a-gallon gasoline should of course be regarded as bullish -- bullish enough, perhaps, to help push the Dow to 12000 early in 2011.

We're long 800 shares with a cost basis of 14.27 against eight January 34 puts held for 0.77.  Offer twelve January 32 puts short for 46 cents, day order.  Our goal is to limit premium risk without negating our hedge. SLW's last two swoons have not quite reached their Hidden Pivot targets, implying that sellers are running out of steam. _______ UPDATE:  Let's try again today (Tuesday), since the put options we were trying to short traded no higher than 0.36 on a swoon at the opening.

We're still looking for the print up at 29.650 that would signal a likely end to the tedious consolidation of these last three weeks. While sellers lack conviction, buyers are holding back, accumulating contracts only on the swoons so that their eagerness is never on display. Once the futures get rolling, signaled by a two-day close above a 30.150 midpoint pivot, they should be presumed bound for at least 32.285.

It's 9 :40 Sunday night, and the futures have bounced nearly $12 after testing Friday's $1372 low. Because the bounce has come from a too obvious place, we'll  hang out the yellow flag until such time as the rally touches 1396.30 --   $12.10 above the evening's so far high.  That would create a strong impulse leg on the hourly chart while putting in play a Hidden Pivot target at 1400.20.  The futures look like they're struggling too hard to go lower to present a serious downside risk at the moment, but if they break down nonetheless, closing below 1370.80, that would be warning of more downside over the near term to as low as 1348.60.

The futures have been down by as much as eight points Sunday evening, but bears shouldn't get their hopes up, since the "weakness" is almost surely being engineered by bulls intent on shaking down the nervous Nellies.  Night owls can try bottom-fishing using the still-developing pattern shown in the chart. If the as-yet-undetermined midpoint support occurs in the middle of nowhere, so to speak, it could create an opportunity with relatively little risk.

Wall Street was headed into an exceptionally slow week before the blizzard hit, so we should brace for ...nada ahead of Monday's opening.  Touts will be out later tonight nonetheless, along with fresh commentary.

I wish you all the happiest of holidays.  The next updates will be out over the weekend for Monday.

The Indoos could seriously damage bearish hopes and dreams if they continue to push higher on the monthly chart. Notice how a print exceeding 11867 would create a bullish impulse leg of monthly-chart degree.  That's a mere 308 points, or 2.7%, above current levels.  The blue chip average could get there this year, even at the current pace, but it could do so in just two days if there were just one more robust short-squeeze left before New Year's.