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COMMENTARY for Monday
TODAY'S ACTION for Monday
Rick's Picks for Monday
On the hourly chart, Gold’s impulsive declines continue to show more power than the rallies. For instance, although last Tuesday’s low exceeded a key bottom at 891.90 recorded a month earlier, the rally since has so far failed to answer this sign of weakness with a correspondingly strong upthrust. That would have required a push touching 964.10, whereas the actual high, 941.10, fell $23 shy. That peak remains the number to beat this week, but any less would indicate that sellers still have the upper hand. If weakness holds way today, the first place where we might look for a bounce is 913.90, a midpoint support with a ‘D’ target sibling at 886.70.
My minimum upside target for the near term is still 771.75, or 778.00 if any higher. (For the June contract, the equivalent numbers are 769.00 and 774.25.) The futures would need to do a little better, however, touching 786.75 today or tomorrow, to affirm that the week-old push from 672.00 is not just the fleeting, reflexive bounce that we suspect it is. Please note as well that the correction would need to go quite a bit higher, touching 837.00 (833.00, basis June), merely to retrace 0.618 of the 2009 bear begun from 943 in early January; and to 794.00 (790.75, basis June) to retrace just the second phase of the decline, from 861.25 . That last number would become my minimum upside objective if the Hidden Pivot at 778.00 is exceeded. Alternatively, if the futures fall hard this week, the first important hidden support comes in at 704.50 (702.00, basis June), although there might be lesser supports where we could attempt to bottom-fish with relatively little risk.
Some chartists calculate ABCD patterns in the way shown, but I have found the targets of such patterns to be less reliable, and therefore less useful, than the ones we typically use. Even so, as a way of predicting how far this bear rally might go, the ‘D’ in the chart, 8107.59, is worth considering. That mutant Hidden Pivot, incidentally, is 20 points above the 0.618 line of the decline from early January’s high.
Goldman still looks like it has the voltage to reach 112.31, a Hidden Pivot target broached here earlier. We’ll want to attempt shorting the stock when it gets there, but in the meantime one of the cheapest ways to catch a ride north would be to leg into a calendar spread at the 115 strike. I’d prefer owning May or June options against Aprils sold short, but it appears that neither of those two months is available. We’ll use July calls instead, bidding 6.00 for the spread two times. This price would be a very good deal — too good a deal, probably, to be filled on a spread order. But if I can see a way to leg into the spread today, long side first, I’ll disseminate instructions in the chat room.
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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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What If Cities, States Revved Up Spending?
by Rick Ackerman on March 16, 2009 12:01 am GMT · 4 comments
Joining a national trend, local governments here in fiscally conservative Colorado have taken a meat axe to their budgets in order to bring spending in line with plummeting sales tax revenues. Broomfield, for one, has just cut outlays by $12.2 million, or five percent, postponing dozens of construction projects and instituting a hiring freeze. Boulder has sliced $3.6 million from this year’s budget and is preparing to trim millions more, since the local business picture is continuing to deteriorate rapidly. (Every resident knows it, too, because of the relentless shuttering of big stores in the relatively new Twenty-Ninth Street mall.) Lafayette is in somewhat better shape, having initiated layoffs at the beginning of 2009 in anticipation of a drop of at least 10 percent in sales taxes revenue. Meanwhile, my hometown of Superior is preparing a contingency budget, having » Read the full article