March 2009

Yesterday's gratuitous spasms created a new point 'C'' for the uptrend begun last Wednesday, slightly lowering our bullish benchmark to 958.60 from 959.50. That's a Hidden Pivot midpoint, and because the pattern that produced it is not a minor one, we should require a two-day close

The 822.50 target caught yesterday's high within 1.25 points, but the nasty swoon that followed was not telegraphed by the chart I had used to project that target. The erratic price action will somewhat alter my projections for the near-term but it will not dampen my bullishness

There will always be days on Wall Street like yesterday, when even those who are barely aware of the stockmarket can understand that its activities are driven mainly by a bunch of yo-yos. To look at the dignified, neoclassical façade of the New York Stock Exchange, one would never guess that it is just a highfalutin' nut-house. Take yesterday, for instance. The Dow Industrials began the day with an orderly 215-point rally, extending the bull run of the last few weeks. But luncheon remarks by our new Treasury secretary caused shares to swoon so precipitously that you might have thought the U.S. was under attack by the Martians.  In fact, Geithner had merely addressed China's call for a new international reserve currency to replace the dollar. He noted -- quite innocently, if innocence is still possible in a public forum -- that the U.S. was "quite open" to any plan that would increase the use of IMF special drawing rights. No sooner had he finished the sentence than the dollar began to dive, causing the Dow to plummet 300 points in a trice. But minutes later in his speech before the Foreign relations Council, Geithner qualified the remark by saying he anticipated no significant change in the dollar's international role. Bulls immediately seized on this clarification, driving stocks and the dollar into yet another hysterical short-covering rally that recouped most of the dollar's losses and left the Dow up 90 points on the day. 7-Minute 'Investment' Horizon  So much for the staid world of investments. We wonder whether the term "investor" itself might be headed toward obsolescence, since no one who trades stocks any more seems to be looking ahead more than about seven minutes. Regardless, we remain bullish for no good reason - or rather, for purely technical reasons

Fed ‘news’ sent gold into spasms, but there was no confusion for us even though we had two possible targets to bottom-fish: Symmetry settled the issue. In the E-Mini S&P, we considered some lows made less tradable because they coincided with prior lows. The one-minute chart didn’t give us enough information to squeeze off camouflage trade, so we dropped down to the tick chart, where the action is more frenetic but almost always rewarding. Finally, we discussed some ways to find entry spots where we would not be plagued by competition.

Currency and metals traders take note: The Dollar Index is stealing up on a Hidden Pivot resistance at 84.62 that should show precise and decisive stopping power. It is

For some time, we have held a nearly riskless bearish position, six June 23-25 puts spreads that we legged into for a debit of 0.08 apiece. That means that we can lose $48 plus commisssion at most, but gain as much as $1152 if GDX is trading 23 or lower come June. More immediately, though, this vehicle could create a robustly bullish impulse leg with a relatively modest thrust surpassing

The correction from yesterday's highs looked to be struggling against a buoyant tide at 2 a.m. The target of the downtrend was 790.50, but we'd risk a few ticks bottom-fishing at its the midpoint sibling,

A downside target at 918.60 loomed as of 1:30 a.m., but any fartherwould be telegraphing more downside over the near term to as low as

We hold a tiny position in Goldman Sachs (GS) right now that's doing fine despite the stock's exceptionally violent swings.  In fact, if the underlying shares are trading at or near $115 when the April options expire in 23 days, our paper gain from two measly calendar spreads and a naked-short "kicker" could approach $1900.  Nor can we get dinged for more than pocket change as long as the stock, which settled yesterday at 110.23, is trading anywhere between zero and $130 when the April options die.  The even greater value of this trade, however, is that it has caused us to focus relentlessly on a stock that can tell us precisely what's on Wall Street's mind.  To judge from yesterday's action, we must warn bears:  The rampage isn't over. A Wicked Little Monster How do we "know" this?  Simply because the spectacular short-squeeze of the last two days exceeded our rally target by a relative mile.  While we'd been looking a run-up to exactly 112.31, Goldman demolished it yesterday and kept going to 115.65 before receding with the tide.  Shorts may have breathed a sigh of relief on the $5 pullback that followed, but they had better not take their eye off  this wicked little monster, because it's bound to come after them again. It would be a rarity indeed if Goldman shares were to die in the stretch after having run the fastest seven furlongs since Secretariat in the '73 Derby. We can't predict exactly when GS will get second wind, but it's not necessary to possess a crystal ball, since we need only look for impulsive rallies on the three-minute chart to tell us when and how to react.  Most immediately, based on yesterday's close, a thrust touching 112.49 would do the trick, and shorts had better scramble if it happens. We view Goldman as the stockmarket bellwether right now, since it has been responding to mildly upbeat economic news as though it fervently