The 38.33 downside target flagged here last week is as compelling as ever, although the corrected number is now 38.22. You can bottom-fish with a 38.24 bid and a stop-loss as tight as 38.06. If the expected bounce from the target hits 38.98, switch to a 15-cent trailing stop. Minimum upside objective: 39.35. _______ UPDATE: Crude has fallen sharply today, producing a so-far low at 38.03 and a subsequent bounce to 39.02. You’re on your own, but anyone who used an initial stop-loss greater than 19 cents should have booked at least a partial gain, since the rally off the low went 99 cents.
COMMENTARY for Tuesday
Rick's Picks for Tuesday
The short-squeeze in the final hour that alleviated yesterday’s dirge is bound to have trouble reaching its 8714 target today, or even the target’s sibling midpoint at 8606. However, both will remain valid as long as an 8498 low recorded Monday evening is not exceeded to the downside. If the futures should close above 8688, the midpoint resistance of a larger ABC uptrend, expect Wednesday to begin with a lurch higher.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
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Window Dressing Lacks Usual Flair
by Rick Ackerman on December 23, 2008 11:30 pm GMT
Stocks are supposed to waft effortlessly higher the last week of the year, but the buying power just doesn’t seem to be there. So much for desperation’s final fling, a hallowed tradition of Wall Street money managers hell-bent on padding their Christmas bonuses. We still expect a flurry of criminally brazen mark-ups before New Year’s Eve, but it looks as though DaBoyz might be saving what precious little ammo they have until the final session hours of 2008.
We glimpsed pale evidence of underlying weakness yesterday bottom-fishing in the E-Mini S&Ps and the QQQs. A recommendation to buy call options in the latter went out Sunday night, pegged to a mildly bearish target about one percent below Friday’s close. We lowered the target via a bulletin Monday, and bought a January 29 call just as the underlying stock was bottoming at our target, 29.13. Ordinarily we would have expected the bounce to last for at least 3-4 hours, since it had taken the QQQs four days to reach the target. But we had to settle for a feeble rally that survived barely 90 minutes, and a profit on the option that would not have covered the tip for two at I-Hop.
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