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Black Box
Forecasts: "Six hours ahead of its time" All That Glitters TRADING NOTES: Patience is paying off for us in gold, which came roaring back yesterday after a one-day selloff that apparently fooled no one. After a firm but unexciting opening, all of the mining stocks tracked below rose sharply, allowing us to take partial profits in two issues, Goldcorp and Randgold. A third, Hecla, came within inches of a longstanding target at 7.51 where we've been intending to sell some December 7.50 calls originally acquired for small change. As for the remaining stock, Royal Gold, we'll hold onto our three hundred shares for bigger and better things. Our cost basis per share is $8.84, giving us a paper profit of $3,570 at current levels -- not bad, considering the small size of our position. (Current, unrealized paper gains for all of our gold positions total $9570, based on Tuesday's close. However, this doesn't include additional, substantial gains on positions that were closed out earlier. The only losing gold position in recent memory was in DROOY, where we bailed out of the stock with a fractional loss after failing by pennies to sell the stock near a rally peak.) Concerning Royal, my minimum upside projection is still $21.78 - an intermediate-term target -- but I'm confident we can get $30 or more merely by remaining patient. Meanwhile, Comex gold, restrained for the moment by the psychologically intimidating $400 barrier, was not quite as feisty as the mining shares, but that will be scant consolation to shorts, who can only pray that the big guns will open fire today if the POG should stick its nasty little head above $400. The December contract ended the day session at 397.60, just off the day's highs, but the futures were inching their way higher in after-hours trading. Their gain for the day was a solid 1.5%, but the real leverage was in gold shares, which racked up gains of between 5% and 10%. Percentage-wise, the biggest winner on our list was Hecla, up 9.8%, followed in descending order by RANGY (7.1%), Royal (6.6%) and Goldcorp (5.1%). We are being conservative in our profit-taking for one reason: any shares that we part with now are going to be increasingly difficult to replace later, never mind at bargain prices. Of course, the mad scramble for gold assets has not yet begun, not by a longshot. So long as such consummately savvy technicians as Elliott Wave International's Steven Hochberg remain bearish on the yellow metal, there will likely be time for us to accumulate more of the stuff. *** Black Box Schedule Because I will be teaching a hidden-pivot seminar this afternoon (Wed) and Thursday, the next issue of MarketWise Black Box - Monday's edition -- will go out early Friday evening as usual. *** Using 'Classical' Pivots to Trade the S&Ps MarketWise Trading School will continue its free online course schedule next Tuesday, November 25, with a one-hour tutorial on how to use "classical" pivots and Fibonacci levels to trade the e-mini S&P contract. The instructor is CBOT veteran John Seckinger, and the session will begin at 9 a.m. EST. To register or obtain further information, please click on the following link: http://www.marketwise.com/MW_main/FreeLEvents.asp *** [The + symbol means we have an open position, while $ means there is actionable advice.] $ DEC DJIA (9610): By closing below a hidden-pivot support at 9630 the futures signaled lower prices ahead. If yesterday's weakness does indeed persist, my minimum downside target would be 9519 (also a hidden pivot). You can bottom-fish there with a 9514 stop-loss in the first two hours, but you'll be on your own thereafter. DEC E-MINI S&Ps (1043.50): A hidden-pivot support analogous to the one I've furnished for the Dow mini-future lies at 1025.00, but I'll leave using it up to your complete discretion. If the support is easily breached, expect the decline to continue or perhaps accelerate. DEC BONDS (110.31): By closing for two consecutive days above a hidden pivot at 110.11, the futures have regained their footing for a possible shot at 113.31 over the next 4-6 weeks. OEX (512.22): The 13-point dive I forecast here yesterday appears to be under way. If so, look for the OEX to grope its way down to a hidden pivot at 506.99, at least, before it can gain a solid foothold. QQQ (33.88): The closest hidden-pivot support below is 33.66, but it's not likely to contain urgent selling on the opening. If the cubes gap beneath it they'll fall to at least 33.50 before bouncing, but it will be from a visually obvious support that's not worth bottom-fishing. DEC GOLD (397.60): I'd expected the futures to shuffle around until Monday, when the crushingly burdensome November 400 calls are laid to rest, but yesterday's strong rally will likely demand a test of resistance at $400 sooner than that. I am still confident in a week-old rally target at $403, but if it's brushed aside, the minor-cycle uptrend would likely continue to at least $415.30. DEC NASDAQ E-MINI (1363.00): The futures appeared bound for the 1350.00 support flagged here yesterday. It comes from an important low made on October 24 at 1347.50, but the technical damage would not become potentially lethal until such time as the 1303.00 bottom registered on September 30 is breached as well. *** INTC (31.84): Intel is headed into the visually obvious support range of 30.50 - 31.00 that I noted here yesterday, but that would hold no particular opportunities for us. FNM (69.46): A rest spot beckons just below, in the consolidation zone between 66.45 and 69 (or so) that was created during the month of September. No specific action is advised. C (45.56): No change: If Citi breaches a 45.30 low notched a month ago it will be the most bearish hidden-pivot signal the stock has given in months. At best, it would consign the stock to an extended wallow between 43 and 46. + GG (17.05): The cost basis for 300 shares that remain in our position is 5.17, since we took an $865 profit on a round lot yesterday, selling it at 16.69. Sit tight for now, since our next move will be to replace those shares asap at a lower price. $ + HL (7.36): No change. We hold ten December 7.50 calls for 0.30. Sell five of them at-the-market today if stock touches 7.51. $ + RANGY (16.14): By taking profits yesterday on a round lot at 15.65, we lowered our basis cost on the 300 shares that remain in our position to 8.28. Let's offer another hundred shares today at 16.64, two cents below an important hidden-pivot target. RGLD (20.74): Again, no change. We hold 300 shares with a cost basis of $8.84 per. Immediate upside potential is to 21.78, a hidden pivot, but we'll hold out for $30+ before we do any profit-taking. IBM (88.95): Big Blue needed to close above 90.46 for two consecutive days to get its mojo back, but that goal is rapidly fading. Now, obvious support beckons near 87.50, but if it fails, the stock will be bound for a minimum 85. EBAY (51.11): There's a hidden-pivot support at 50.27 where we can expect a bounce, but if the stock falls beneath 48.11 it would likely spell an end to the bull run begun in October 2002.. Rick Ackerman ***
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