For a few shining hours yesterday, anyone monitoring the markets might have believed that all was right with the world. Shares were sharply and broadly higher, precious-metal bulls were getting savagely rebuked, and the Fed Chairman was acting as though he’s got everything nicely under control. Bernanke in fact predicted the recession would end this year and give way to a recovery in 2010 if actions taken by the government lead to some stabilization in financial markets. However, as the Wall Street Journal noted online, that’s a mighty big ‘if.” Not long ago, we had classified as a lunatic anyone professing to see light at the end of the tunnel in 2009. We’ll be more charitable toward Mr. Bernanke, however, since it is his job, as it was Mr. Greenspan’s before him, to obscure the true state of the economy even in relatively good times. So what of yesterday’s ostentatious attack on bullion? Although a few respectable technicians evidently believe it could be the beginning of a serious correction, we don’t see it that way. In fact, we’d be surprised if the selling went any lower than 905.60, the halfway point of the rally from $803 that began in mid-January. That rally was no haphazard thrust, either; rather, it was purposeful and constructive to the extent it peaked slightly above an important high at 1005 recorded last July. That makes the entire thrust “impulsive,” which means that it has refreshed the still-dominant long-term bull. If this is indeed so, the weakness we saw yesterday should prove to be only mildly corrective rather than the start of a nasty downtrend lasting more than a week or two. New York and San Francisco Meanwhile, and assurances from Helicopter Ben aside, we don’t see even a glimmer of hope that the recession will end this
Tuesday, February 24, 2009
GS Goldman Sachs Group (90.68)
– Posted in: Current Touts Free Rick's PicksA Hidden Pivot support not far below, at 78.17, offers a promising spot to try bottom-fishing today -- with a tight stop-loss. Puts and calls in this vehicle are priced in the Twilight Zone, but we can play it conservatively by bidding for a single March 80 call (GSCP), stop 77.99, if and when the stock reaches our target. The March 80s should be trading for around 6.70, but you may be able to refine the bid by monitoring the spread closely as GS gets within 25 to 30 cents of the target. _______ UPDATE: With a maniacal lurch, GS was airborne at the bell, leaving our cheapskate bid choking on dust. An hour before the close, the short-squeeze had pushed the stock as high as 90.38 -- up more than $10 on the day. This is surely the slow route to my $29 target.
GDX Gold Miners ETF (36.47)
– Posted in: Current Touts Free Rick's PicksThe 40.85 target given here a while back is still valid, even if GDX appears to be in no great hurry to get there. From a Hidden Pivot perspective, what we should notice right now is that a thrust exceeding last week's 37.80 peak by just 1.09 would add two more "external" peaks to the bull's recent rally record, replenishing the uptrend with unmistakable power.
April Gold (974.00)
– Posted in: Current Touts Free Rick's PicksNotice in the chart how Gold's strong thrust from mid-January's lows has surpassed three prior peaks, two of them external, without taking a breather. Although the peak recorded on Friday exceeded last July's 1005.30 high by just $2.40, that's enough to refresh the bullish trend, as well as our confidence that higher prices are coming. For the moment, we'll continue to use the Hidden Pivot at 1025.20 as a minimum upside projection for the very near term, but also as a telltale when it is hit to help us gauge the strength of the uptrend. ______ UPDATE: Gold has gotten shaken down hard today, catalyzed by the latest drivel from Helicopter Ben. My downside target was 968.10, as posted earlier in "Today's Action," but the selling so far has pushed the futures down as low as 960.20. We had expected the Powers That Be to take a whack at gold when it poked above $1000, but it appears that They have temporarily succeeded in quelling the bullion insurrection with just a few well-timed words about inflation pressures "easing". We call that deflation.
DJIA Dow Industrial Average (7115)
– Posted in: Current Touts Free Rick's PicksRegarding the 4670 target in today's commentary, it comes from the chart displayed with the essay, although the one I've linked to this tout makes the ABC price points explicit. Hidden Pivot aficionados may notice that the point 'B' of the pattern did not exceed the low recorded in March 2003. While that would make me think twice about about using 4670, precisely, as a place to bottom-fish, the weight of the downtrend itself suggests it is well capable of reaching such depths.
