December 2012

A so-far $13 bounce has turned the February contract higher from 1636.00, but the 1631.80 downside target given here earlier still looks too compelling to avoid. Under the circumstances, we should expect the futures to relapse down to that Hidden Pivot today or Monday. The good news is that the support can be bottom-fished via camouflage or with a straight bid tied to a stop-loss as tight as six ticks.

“The  only response to a child’s grave is to lie down before it and play dead.” – Bill Knott, poet. [This commentary has elicited more responses than anything previously published on the site. I'll leave it up over the weekend to accommodate final thoughts and summations. RA] The shooting rampage in Connecticut makes any other topic seem trivial at the moment. When America gets back to business on Monday it will be with a heavy heart and the bewildering feeling that we are powerless to do anything about such violence, now or in the future. Those who advocate gun control undoubtedly believe their cause is just.  But they might as well be talking about banning automobiles to save what remains of the world’s coral reefs and glaciers. For even if it could be done, and even if carbon emissions were the undisputed cause of the problem, it is already too late.  Better to adapt than to tilt at windmills.  To suggest that gun control is the cure for rampages like the one that occurred on Friday is to avoid confronting the real problem: civilization itself is mentally ill. And for that, there are no easy cures -- certainly not outlawing certain types of weapons. Could it get any worse than the mass murder of twenty first-graders?  Unfortunately, and tragically for humanity, it conceivably could. We shudder to imagine what horrific event will eventually overshadow the unspeakable carnage that took place at Sandy Hook Elementary School. Twenty children, none older than seven, were murdered where they sat, each shot repeatedly by a high-powered rifle. Six adults were slain by that weapon as well, some of them in the heroic act of shielding the children. Arm All Adults Better that all of the adults should have been packing heat. Many of you,

Notice how Soybeans' most recent thrust failed by two cents to surpass the very subtle external peak circled in yellow. This chicken-hearted action is a green light to position trades from the short side, including selling call premium, from now until the cows come home. Whether put premium will prove equally safe to sell depends on whether the minor downtrend exceeds its 'p' support (or more bearishly, its 'D' target.) If not, we could see this vehicle shuffle sideways for an eternity -- or until a 1930s-style dust bowl makes beans scarce.

Fiscal-cliff masturbation is the stock market's current mode, and if you've somehow found this interesting or are hoping for something more from Wall Street's Masters of the Universe, you need to get a hobby. A DJIA tout (and chart) included in today's lineup explains why bears hoping Santa will get sacked this year are courting disappointment.  Technically speaking, between now and December 26 DaBoyz could inflict nearly 300 points of pain on shorts in any given two-day period.  My Hidden Pivot target is 13524, and it will remain valid as long as the Indoos, currently trading for around 13252, do not exceed 13118 to the downside.

We were briefly short the Diamonds earlier this  week, but with that petty distraction out of the way it's a good time to look at the cash Dow disinterestedly.  It sold off 100 points yesterday, but bears shouldn't get their miserable hopes too high, since the recent top easily exceeded the 13321 midpoint resistance of a bullish pattern that projects to 13524 (see inset). That last number affords DaBoyz plenty of running room for a one- or two-day romp, and you should hold that in mind, along with a bullish bias, in the days ahead. You can learn to do this stuff yourself, and it’s easier than you might think. Click here for details — and a $50 discount coupon.

With the goal of legging into bullish ‘butterfly spread’ in Apple, we took a close look at the stock’s intraday charts as well as the options grid. AAPL was trading for around $530, but our strategy was tied to expectations of a quick rally to at least $600. Under the circumstances, acquiring a January 590-600-610 butterfly makes sense. Our goal is to do this at no cost, or perhaps even for a small credit, leaving us with no risk. Is this possible? Indeed it is, for reasons that should be clear to you after you’ve reviewed this recording.

My outlook for T-Bonds has been bullish for quite a while and remains so down to 2%, but we should nonetheless take note of some bearish impulse legs that have developed recently on the daily chart (see inset).  So far, they amount to a mere duel with a more powerful, bullish impulse leg begun from 144^24 in late October. We'll have a better idea of bears' earnestness when we see how they interact with the 145^00 downside target of the small pattern shown. A breach of that hidden support by more the 3-4 ticks would hint of more weakness to come, while a breach of the 144^24 low would sent up a warning flare.

The Gold Bugs Index looks very likely to fall to at least 402.46, the 'D' target of the pattern shown. The p midpoint support of this authoritative pattern lies at 433.38, and because it has already been exceeded by six points, it is probably just a matter of time before the implied 8% drop gets under way. Bulls would get a reprieve and perhaps a new lease on life with an impulsive rally that exceeds the two labeled peaks, but anything that falls short of that would likely be just noise.

It's time to write off the December 40-45 calls spreads that we legged into for free back in September.  They could have produced a profit of as much as $4000 if SLW had rallied even moderately since then; alas, even with perfect timing and a great trade, we were able to do no better than break even this time. I'd already pronounced our calls dead more than a month ago when the stock took a header to $35 as we were coming down the home stretch. It's tempting to write this stock off as a tease, but we'll continue to look for riskless buying opportunities as before, since sooner or later, it's going to have its day. One place we might look to get long is at 35.32, the midpoint support of the pattern shown.  While everyone and his mother will be testing the water just above the two obvious lows (see inset), we will have a far more precise spot in mind to look for the turn. As always, we'll try to hold entry risk down to literal pennies per share if we do the trade. ________ UPDATE (6:59 p.m. EST):  Mr Market may be powerless to negate Hidden Pivots, but he has a funny way of screwing with them when a good opportunity presents itself.  Yesterday, for instance, moments from the closing bell, he summoned the gumption to bump up against the 35.32 pivot noted above, and to fondle it in full view of all of us who were monitoring the support.  While I'm not inclined to play this particular game, initiating a trade as the NYSE clock strikes 1600 hours, some of you may have gone long based on the tout above.  If so and the trade survives, please don't hesitate to ask in the chat room