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COMMENTARY for Friday
TODAY'S ACTION for Friday
Rick's Picks for Friday
The futures have gotten squeezed for 17 points since bottoming late Thursday afternoon, so there are obviously a few short-sellers left with more guts than brains. Night owls could take advantage by bottom-fishing at 900.50, stop 899.75. That’s the midpoint support of the radically unintuitive ABC pattern shown in the chart, and it looks as enticing as any opportunity I can find on the lesser charts. The trade would be negated if the futures move above the point ‘C’ high at 915.00, although you could adjust the point ‘p’ upward if that occurs.
A Hidden Pivot support at 901.50 is the best of an unappetizing lot, but it would become a realistic downside target for the near term if the futures bludgeon its sibling midpoint at 910.30 into submission. The support has already been exceeded by three ticks — not quite enough for us to infer that it’s a goner. More likely is a rally to 929.40 that would provide the finishing stroke to yesterday’s coitus interruptus (which in a manner of speaking makes Thursday’s high at 926.50 Redfern).
The Dollar Index continues to flirt with catastrophe, having exceeded a crucial midpoint support at 83.45 yesterday by 0.03 points. I”ve already predicted that DXY will fall to at least 80.05 if the support is breached decisively, which has yet to happen. Alternatively, the index would need to print 84.99 on a rally to get out of immediate jeopardy. The tiny but technically crucial look-to-the-left peak this would exceed is shown in the accompanying chart.
We are attempting to short four June 10 calls for 0.60 against four September 10 calls we already hold with a cost basis of 0.69. Leave the order in for today, but check back during the day, since we may need to adjust on-the-fly. DaBoyz got a little piggish yesterday with the brutal head-fake opening, but there looks to be enough underlying strength to get us filled on our order.
The futures are within a day’s weakness of a potentially very important Hidden Pivot support at 119^10. I have my doubts that it will end the bear market, but it could engender the kind of bounce that will make shorts doubt, at least for a short while, that the U.S. Government is indeed bankrupt. The enormous rally in mid-March that dominates the accompanying chart was the only feel-good day the bonds have enjoyed the whole way down. Some may recall that it coincided with an announcement that the Fed would buy whatever quantities of bonds were required to hold interest rates down. One could reasonably infer that the underlying purpose of the bank bailout has been to allow them to unwind the foolishness of that day.
Because Sugar was mentioned in the chat room, I’ve pulled together a chart that shows a potential last-gasp move to 16.03, basis the NYBOT July contract. The target is calculated by simply extending an ABC pattern at the tail end of the 180-minute chart.
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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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Reversal Day Leaves Sellers on the Attack
by Rick Ackerman on May 8, 2009 12:44 am GMT
Are bears about to get a breather? It certainly looks that way, since two trading vehicles that we track and trade daily reversed sharply yesterday without reaching their respective Hidden Pivot rally targets. We were looking for Goldman Sachs to hit a minimum $144.19 to signal the end of the massive short-squeeze begun in November; the stock only reached $141.56 in the opening minutes of the session, however, and then it was downhill for the rest of the day. When the dust settled, the stock had fallen nearly $10, recouping some of » Read the full article