Tuesday, April 7, 2009

The nearest support, a Hidden Pivot at 820.00, does not look like it would be very useful, lying as it does within 1.25 points of yesterday's low. More appealing for purposes of getting long is the look-to-the-left-peak at

Yesterday's plunge lengthened and strengthened the bearish impulse leg begun on the daily chart from 343.27 last week. We've been using 249.04 as a minimum downside objective, but I've going to lower it to

A rally today exceeding 899.50 would turn the hourly chart bullish. That wouldn't be enough to negate our 845.20 downside target -- a print at 970.10 would be needed to accomplish that -- but it would be an encouraging start. If and when the futures fall to

Weak selling Monday night in the E-Mini S&Ps appears for the moment to have met its match in the form of a very minor Hidden Pivot support at 827.00. Even so, it would require quite a leap from current levels to put the bulls back in charge of the hourly chart. Gold, meanwhile, was in a delicate rally, needing another $20 to get back in contention for the near term.

Yesterday's weakness in stocks was attributed to "concerns" about the banking system. At least, that's what we heard on the car radio while we were out doing some errands Monday morning.  Funny how these supposed concerns can pop up at any hour of the day, often for no apparent reason. Scarcely ten hours earlier one might have thought investors hadn't a care in the world, let alone grave worries about the health of America's banking system. It was late Sunday night, and we were just about to turn in as the electronic index futures wafted blissfully higher, up more than 12 points in thin trading. The action implied that DaBoyz were intent on opening the Dow Industrials about 100 points higher on Monday morning. This prompted us to put out a late-night bulletin telling subscribers to buy some April 130 calls in Goldman Sachs, since we hold an option position with slight risk above that price. We advised buying the calls for 2.20, since Goldman shares have been leading the stock market higher and looked like they were capable of leaping the ten points that would have tripped our "yellow alert." Adding to our nervousness was what we have dubbed the Banking Magic Act of 2009. It arrived last week in the form of an accounting change by the FASB that, with the wave of their wand and a little fairy dust, added hundreds of billions of dollars to the banks' bottom lines. Why take unnecessary risks when even the most carefully constructed trading strategy can be instantly undone by such wizardry, right? A Goldman Surprise So there we were Sunday night, ready to pay up for some April 130 calls in Goldman when the opening bell rang Monday morning. Imagine our surprise on awakening to find Goldman shares getting whacked hard