March 2009

Late-Hours Tedium

– Posted in: Current Touts

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.

CBOE Volatility Index (VIX)

– Posted in: Current Touts Free Rick's Picks

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

Citigroup’s Rally Just Hubris?

– Posted in: Free

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

Dollar Index (DXY; last: 84.32)

– Posted in: Current Touts Free Rick's Picks

Two weeks ago, I posted a 90.26 target for the Dollar Index without considering its potential importance. Because this target was six months in coming and encompassed half of the dollar's bear rally from the March 2008 bottom, I probably should have drum-rolled and billboarded it; instead, I noted merely that a move past the target would telegraph more upside amounting to as much as 5%. In retrospect it's logical to infer that