Tuesday’s E-mini class yielded an insight that may be useful to those who trade Expedia (EXPE). The stock yesterday came within 71 cents of a major hidden-pivot support at 55.15 that has been gestating for nearly a year.This means that EXPE could be hours away from a very powerful bounce, within the context of a bearish cycle that began five weeks ago. Ordinarily we would not hesitate to suggest jumping on some Feb 60 calls. But the options in this oft-crazed stock are so breathtakingly pricey, with an implied volatility of nearly 60, that we cannot recommend laying in a big supply of them for mere speculation. But just to make things interesting, you can try to buy a single February 60 call for 1.40, contingent on the stock trading 56.00 or higher. Earnings are due out after the close, and if they send EXPE plummeting beneath the 55.15 target our outlook would turn bearish, with a minimum downside target in the low 30s(!).if you are a hedge fund with a profitable short position in this stock, at least 30%-40% of it should be covered at these levels (i.e., 56 or lower).
[The + symbol means we have an open position,
while $ means there is actionable advice.]
Gold Futures
APR GOLD (379.90): The futures bettered our $382.90 target by a hair, implying that the short-term rally cycle has farther to go. However, we found a previously unnoted hidden pivot at 383.70 that could stop this surge, if only for a short while. If not and the futures simply rampage higher today, here is a succession of pivots you can use for targets: 388.60, 392.50, and 396. If a target is exceeded even slightly, you should infer that the next is all but clinched.
+GG (12.94):No change. We hold 200 shares for an average 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.
$+DROOY (4.26):We hold 400 shares for an average 4.66. We were bidding 3.82 for more stock but won’t chase it higher, so no action is recommended.
$RGLD (28.42): Royal left our niggardly bid for Feb 30 calls choking on dust yesterday, but there will be other opportunities to get long. For now, though, do nothing further.
$DJIA (8013.01):There are two hidden-pivot obstacles just above – at 8052.50 and 8057.88. Both will work very precisely if at all, so you can short either with a tight stop if you are feeling venturesome.If these numbers are easily penetrated even slightly, expect higher prices.
E-Mini S&Ps (849.25): The futures probed our 840.50 target insistently yesterday, but bottom-fishing down there was left to your discretion. The futures eventually found a slightly lower bottom, near where they bottomed numerous times during the last couple of weeks. We’ll back away for now, since the March contract is a captive of technical levels that are too visually obvious to afford us much of an edge.
MAR 10-YEAR NOTE (114.140): No change. The futures would need to close above 114.310 to suggest that a test of the important January 31 peak at 115.175 is likely.
OEX (428.84): Nothing to suggest. For the third time since July the OEX appears headed down to the mid-380s, the lower end of a tedious, long-term range. We’d warm to the short-term bullish case if this vehicle can rally to a bullish tripwire at 439.87.
QQQ(24.49):Unless the cubes can rally above 24.80, we expect the current decline to continue to at least 23.39. That’ll be a good place to try bottom-fishing if the opportunity should arise.
MAR NASDAQ 100 (973.50):Unless the futures can climb above 998, we expect the current decline to continue to at least 941.50, a hidden pivot. We’ll consider bottom-fishing there if and when the opportunity comes.
MarketWise Black Box is published on weekdays 240 times per year. Copyright 2003 by MarketWise. For further information please go to www.marketwise.com. All information was gathered from sources believed to be reliable The risk of loss in futures, stocks or options can be substantial; therefore only genuine risk s should be used for such trading. Futures, stocks and options may not be a suitable investment for all individuals, and individuals should therefore carefully consider their financial condition in deciding whether to trade. Commodity option traders should be aware that the assignment of a short position will result in a futures position. Past profits are not indicative of future profits.
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