Friday, March 20, 2009

The futures were groping for a bottom Thursday night, two ticks off an in-your-face target at 773.50 that we pondered during an impromptu webinar convened earlier in the day. A penetration of this Hidden Pivot support by more than two ticks would probably set up

Around 2:30 a.m., the mini-indexes were treading on minor support, seemingly reluctant to do anything dramatic in the absence of any real news. If they break down overnight, look for the Industrial Average to fall to 7283 in the opening hour before finding traction.  Alternative, if the  day begins with a short squeeze, bulls will gain the upper hand, probably for the remainder of the session on a print at 7497.

The rally missed our bullish benchmark by 0.70 yesterday (basis June), hinting that there is not enough conviction to keep Wednesday's short-squeeze going on merely bullish buying. The good news is that bears are still very much on

Since we've considered the VIX today, we might as well drop in on another vehicle that has not gotten much ink in Rick's Picks: Soybeans. The July contract has a beautiful pattern that points to a tradable top at exactly

A new subscriber asked in the chat room whether I track the Volatility Index. I haven't done so in the past, but I will if it promises to give us an easy ride to profits. One thing I like about the VIX is that the puts and calls look fairly liquid -- unlike those in, say, gold. Also, my hunch is that VIX is not as heavily scrutinized and over-traded as some of the vehicles we trade, and that means that it might be less tricky to play with. A negative is that VIX

Today we feature the  work of our good friend Chuck Cohen, who combines technical savvy and horse sense better than just about anyone we know.  He thinks Citigroup's meteoric rise in recent days bears eerie similaritites to the stock's spectacular bear rally last October, when it rose from 12.85 to 23.50 in just two weeks. Then, as now, he recalls, the hubris was deafening Here's Chuck: "Back in October 2008, the stock market had just completed a very sharp drop dragging the Dow down to just under 8000. A sharp relief bounce carried the averages up to about 9,300 by the end of the month. At that time, most of the commentators, who never saw the severity of the decline coming, proclaimed that the correction was over, the worst had been discounted in the financial area, and stocks were once again a strong buy. But as I have pointed out on many posts [at LeMetropole.com], there was something missing in this happy view. There was never any real pessimism displayed in the sentiment indicators and in the financial media. Those who never told their readers or listeners to be careful all the way down were still saying 'buy.'  Their advice was to 'average down'  and continue to buy stocks, for over time this strategy has always worked out. "But as I looked over some of the financial charts, I was struck by one very disturbing chart: Citigroup. So I submitted my analysis to Bill [Murphy of LeMetropole] on October 31, having little inkling how far this key company would fall, and what it possibly meant. The article is repeated below to explain my reasons back then for being so bearish. This brings us to the current situation. This week an 800 point rally in the Dow has once again generated a huge