We’ve been holding fast to an outlandishly bullish Dow target of 9955 for the last 600 points, even if we can’t claim to understand why stocks seem to want to keep rising in the face of the most severe economic downturn since the 1930. It’s not as though deflation’s chokehold on the economy has taken a hiatus. Yesterday, for instance, amidst a climactic frenzy of campaign coverage, there was still room above the fold for news that manufacturing activity had fallen to a 26-year low, that auto sales were down 32% in October from already depressed levels, and that the banks, far from disgorging bailout money to down-and-out homeowners, have continued to tighten their lending standards. (Click on photo to enlarge) We never put much store in the Guvvermint’s lend-or-else mandate, but we’d expected the resistance to credit growth to come mainly from the borrowers’ side. But what’s a banker to do if he can’t find any creditworthy borrowers? In fact, the bankers have done what we might have expected �' i.e., taken a big chunk of the bailout money to pay themselves bonuses. Goldman Sachs even added a little Keynesian stimulus, taking $12 billion in rescue money for its London operations while paying out $14 billion to the partners. There are 443 of them, and each will pocket a Christmas bonus averaging a little less than $5 million. Maybe that’s why stocks rallied yesterday? If Goldman partners are a�'gittin' while the gittin’s good, then maybe time aren’t as tough as they appear. (If you’d like to have Rick’s commentary delivered free to your e-mail box each day, click here.) *** And the Winner Is… It’s 8:30 p.m. in the East, and Obama has just been projected as the winner in Pennsylvania. If this assessment holds, it will have reduced
Wednesday, November 5, 2008
December Gold (758.30)
– Posted in: Current Touts Free Rick's PicksThe December contract continues to make headway toward a 788.40 target disseminated to subscribers earlier today. Corrective weakness has brought the futures down as low as 756.30 in evening trading, but they should find traction overnight no lower than 753.30, a minor Hidden Pivot whose provenance is shown in the accompanying chart. If the support is touched before 1 a.m. EST, you can buy there with a stop-loss as tight as four ticks. _______ UPDATE: The support failed, suggesting at least minor weakness ahead. The so-far low as of 1:30 a.m. EST is 750.80, and although the futures have rallied $8 since, they'll need to hit 763.10 to undo the short-term damage.
December Silver (10.215)
– Posted in: Current Touts Free Rick's PicksThe futures are struggling to stay above a midpoint resistance at 10.265, but they'll need to close above it, or exceed it by at least 50 cents intraday, to signal their readiness for a move to the 11.330 target that has served in recent days as our rally objective. Swing traders should consider taking profits on at least half of any long positions at that price, and long-term bulls should also adjust in anticipation of a pullback. Night owls can try bottom-fishing at 9.850, stop 9.835, if 10.300 is not exceeded to the upside first.
QQQQ Nasdaq 100 Trust (32.80)
– Posted in: Current Touts Free Rick's PicksMy minimum upside target is still 35.40, but I've lost my appetite for buying puts there, since even a slight breach of that number would portend more strength to as high as 36.38. That would imply quite a move from these levels, but option premiums are too high to be enticing for an unhedged long position. Instead, let's try to leg into some Dec 36-Nov 36 calendar spreads, starting with a 1.02 bid for two December 36 calls (QQQLJ), good for the first 15 minutes of the session. If the order fills, I'll put out further guidance in the Intraday Notes section, so keep your Bulletin Launcher switched on if you'd like to be apprised. Do-it-yourselfers, please note: If you can get this spread on for 0.56 or less, it's a good "do". ________ UPDATE: Lower the bid for Dec 36 calls to 0.89, since overnight weakness has brought the Cubes down overnight. _______ UPDATE (10:20 a.m.) Lower the bid for the calls to 0.75, since I am now projecting downside to 32.90 for the underlying. _______ UPDATE (12:32 p.m.): Our order to buy four Dec 36 calls filled when the Cubes dropped slightly below 32.90. Now, offer four November 36 calls (QQQKJ) short for 0.60, good-till-canceled.
