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COMMENTARY for Monday
TODAY'S ACTION for Monday
Rick's Picks for Monday
Sellers turned timid after bullying the futures down to within three ticks of a key low at 885.00 recorded in mid-March. The support looks much too obvious to work, and so we should prepare for more weakness this week down to at least 845.20, the Hidden Pivot given here last week as a minimum bear-cycle objective. The midpoint sibling of that number is 907.60, but it is resistance now, and any rally that touches it is a good candidate for shorting with a tight stop-loss.
The futures were chomping on the bit Sunday night, grinding away at an 844.50 resistance noted here last week that should have withstood more punishment. Any further upside would need to surpass 871.00 today or tomorrow to keep the ruse going, but we shouldn’t bet against it, since that would imply a mere 200-point gain in the Dow. Alternatively, it would take a selloff touching 820.00 to turn the lesser charts bearish.
The futures were sinking fast Sunday night, bound for a minor Hidden Pivot support at 11.995 that can be bottom-fished with a three-tick stop-loss. Be prepared to jump out of harm’s way if the stop is hit, however, since that would be signaling more downside to 11.620, a target given here earlier. There is yet another at 11.140, and although it was not mentioned here earlier, it is equivalent to the 845.20 target in June Gold. The nearest rally resistance of significance lies at 12.510, the midpoint sibling of the 11.995 pivot.
March’s powerful thrust has the potential to produce a follow-through to as high as 1.4395, but buyers will likely need to consolidate for another 5-8 days before they’re ready to run. In any event, a two-day close above the 1.375 midpoint resistance associated with the target should be regarded as evidence that bulls are in no mood to wait.
At the peak of Friday’s rampage, the short squeeze in Goldman had gained 65% from early March’s lows. Our target most immediately is 120.34, but if the stock gets past it by more than 20 or so cents, look for the rally to continue to 123.66. Our position yields a theoretical profit over a wide range of prices, but I’ll suggest bidding 2.20 for an April 130 call today just for good measure. Here’s what we already hold: long the July 115-April 115 calendar spread twice for 6.00; short an extra April 115 call for 1.40; and long two July 120-April 120 call spreads for 9.80. _______ UPDATE (9:25 a.m.): Goldman has come down overnight with the indexes. Lower the bid for April 130 calls to 1.60, and make it for two contracts. (Note: The order filled at 1.35. No further action is advised for now.)
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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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A Health Subsidy Keynes Would Love
by Rick Ackerman on April 6, 2009 1:57 am GMT · 3 comments
A recent story in the Wall Street Journal explained how the newly jobless may be eligible for employer-sponsored health insurance coverage at drastically reduced rates. Sounds like good news, right? Not if you’re an insurance agent. In fact, it’s a kind of reverse stimulus for those who make their living selling health coverage. Until now, a substantial portion of their business came from workers who had recently lost their jobs, since many newly » Read the full article