Just when we’d written the dollar off as brain-dead, it comes roaring back for no good reason! Does this mean that Treasury paper, too, will soon be bounding to new record highs, also for no good reason? We’ll know soon enough. In the meantime, how do we account for the dollar’s resurgence over the last month, following its horrific collapse after Thanksgiving? The only thing we can think of, knee-jerk contrarians that we are, is that it’s a case of buy-the-rumor, sell-the-news. The rumor was that a zillion dollars worth of bailouts and cash infusions into the banking system have yet to achieve even a measureable result, much less a significant one. The news is that Helicopter Ben is well on top of the situation and will soon inveigle yet more metaphysical trillions from who-knows-where for the purpose of shoring up financial institutions, if not shaky borrowers. Some wag estimated that this could send Treasury issuance above $2 trillion in the remaining three quarters of 2009. So how did the dollar react to all of this blandly catastrophic news. Why, by rallying sharply, is how. The Dollar Index was up nearly 1.5% on the day, proving that investors are not merely delusional about the state of financial system, they are borderline psychotic. Tune them in to the self-aggrandizing charlatans who have been touting the prospect of an economic recovery in the second half, and you have all the ingredients needed to produce a 25% sell-off in the stock market. Sentiment indicators underscore this possibility, since they have skewed wildly bullish in the last couple of weeks. If you want us to keep you apprised, click here to receive our free commentary each day by e-mail.) More Letters on Inflation/Deflation We have been deluged with responses to a recent commentary, “Calling
Wednesday, January 14, 2009
E-Mini S&P (870.50)
– Posted in: Current Touts Free Rick's PicksUnable to crack an 873.50 rally target given here yesterday, the futures spent the day marking time in a 15-point range. They were floating aimlessly higher early Tuesday evening, although a push past a minor midpoint resistance at 871.25 would likely put them on course for a move up to at least 876.25, a Hidden Pivot. This was just little stuff -- too meager, perhaps, even for a night-owl snack.
February Gold (820.50)
– Posted in: Current Touts Free Rick's PicksDuring an impromptu webinar yesterday, we looked for a way to initiate a long position on-the-spot but found nothing. The next three hours of meandering retroactively justified our inaction, but what now? My gut is saying that yesterday morning's rally out of the hole, a $16 thrust, should have gone a bit further, surpassing an 833.80 peak made on the way down Tuesday, if the futures are about to take a leap higher. However, a print at 833.90 is still the benchmark for turning bullish on the short-term picture. Incidentally, the futures have exhausted all downside targets on the hourly chart, having bottomed most recently just above the 813.30 Hidden Pivot shown. This is not necessarily bearish, but if the low gets whacked hard by week's end, it could spell more weakness down to around 766, the midpoint of a larger pattern. _______ UPDATE: I posted the following in the chat room this morning: Most compelling target on Feb Gold's chart: 766.60, a major HP midpoint. (180m chart, A=938.80, from Oct 10) That's where I think gold is going -- a back-up-the-truck number.
TBT UltraShort 20+ Year Treasury (40.30)
– Posted in: Current Touts Free Rick's PicksThere are two potentially tradable supports in the hourly chart: at 39.95, a Hidden Pivot midpoint; and at 38.85, its 'D' sibling. A stop-loss of 0.15 points is as wide as you should use -- and please note that bottom-fishing at the lower number is a more conservative play. Since this vehicle correlates inversely with the long bond, the projection implies that a sharp rally lies immediately ahead for Treasury debt. ________ UPDATE: A long position initiated at the "conservative" pivot referenced above would have enjoyed favorable odds, since TBT rallied 45 cents after bottoming at 38.78.
