The March Bond futures look like they may have one last thrust left in them, presumably to Hidden Pivot target above 144. A corresponding move in this vehicle — an “ulta-short” ETF — could be expected to bottom at 33.27. It’s impossible to predict how much the January 34 calls (TBTAH) will be selling for at that time, but we should be ready to buy them in any event, since that would effectively allow us to stake out a short position in the bonds. To determine a fair price for the calls, I’ll suggest using whatever bid is reflected by the market makers if and when TBT comes down to within 0.10 points of our 33.27 target. If you want to be alerted in real time when this opportunity materializes, keep your bulletin launcher switched on, since I plan to provide timely guidance intraday.
The futures face jeopardy over the near term to as low as 804.40. That’s a Hidden Pivot, and it was derived from a pattern that looks authoritative because of the way the A-B impulse leg was formed. Notice in the accompanying chart how point ‘B’ exceeded the very subtle but key low recorded three days earlier. The overshoot was by just a single tick, but that’s enough to suggest that the downtrend is likely to produce a follow-through C-D leg. There are two ways the bear could be waylaid, however: 1) by a rally from the 828.70 midpoint that exceeds 854.50; or 2) by a rally from no lower than 828.80 that surpasses 861.50.
At day’s end, the futures looked poised for a 30-point drop to a Hidden Pivot support at 827.25. They’ve yet to reach its sibling midpoint at 852.75, but if that number gets busted, the move down to 827.25 would become an odds-on bet. Night owls — including a growing contingent of traders from Oz — can try bottom-fishing at 852.75 with a stop-loss four ticks below. _______ UPDATE: The futures went no lower than 856.00, so we did nothing.
Member-only content. Please Login or get a free trial of Rick's Picks to view.
Member-only content. Please Login or get a free trial of Rick's Picks to view.
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.
Do Deflationists Have It Wrong?
by Rick Ackerman on December 27, 2008 6:05 am GMT
Jim Willy is one of the few commentators on the economic scene who deserves our serious attention. In his latest report, he trashes the crackpot notion that we’re in a mere recession, or that a recovery will occur in 2009. The economic paradigm is shifting tectonically, he says, and few things will be the same once we emerge from the current crisis. He also has this to say: “The year 2009 by year-end should be marred by very big inflation outbursts in price structures, enough to silence the wrong-footed deflation theory guys.”
Since I consider myself a deflation-theory guy, though certainly not a wrong-footed one, I will have something to say about this in Rick’ Picks commentary due out later this weekend. Let me mention that I have been shouting deflationist warnings from the rooftops since the early 1990s. I first wrote on the topic for Barron’s in the early 1990s, focusing on the key role of money velocity, and returned to it often in the column I freelanced to the Sunday San Francisco Examiner during the years of the dot-com boom.
» Read the full article