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COMMENTARY for Monday
TODAY'S ACTION for Monday
Rick's Picks for Monday
Gold has unfinished business above these levels, since last week’s choppy rally fell about $8 shy of a target I’d broached at 934.20. Price action Sunday night evinced the usual gratuitous hysterics, but there was nothing promising on the intraday charts that I could recommend to night owls. In any vent, we can use 931.90 as a bullish benchmark today, since a print at that price would refresh the bull uptrend on the hourly chart.
Friday’s headline rally may have looked impressive to the news media, but most chartists would not have failed to notice that it didn’t quite get past Thursday’s highs. That could still happen today, but for the time being we have inferred reticence on the part of buyers that could conceivably turn into outright weakness in the days ahead. Sunday night action suggested DaBoyz were uncertain about which direction they would maneuver stocks next; however, bears seemed to hold a very slight edge shortly before 8 p.m. with the creation of an impulse leg on the 5-minute chart that has so far gone unanswered by buyers. If bulls re-take control, however, the futures could get to 936.50 in the early going. That’s a Hidden Pivot resistance, and it can be shorted with a stop-loss as tight as three ticks. _______ UPDATE (10:07 p.m. EDT):DaBoyz were jockeying the futures lower tonight, inadvertently opening a possible opportunity for us if the selling hits a Hidden Pivot support at914.25. You can bottom-fish there with a stop-loss as tight as two ticks, but you’ll be on your own thereafter if the order fills in the wee hours. This plan will remain viable as long as 923.00 is not exceeded to the upside first.
The futures have taken a tentative bounce from within five points of the 119^10 Hidden Pivot support that I’d flagged last week as a potentially important low. The minor uptrend that has ensued so far projects to 121^28, but the June contract would first need to get by its midpoint sibling at 121^04 to challenge the higher resistance. The less delicately this scenario unfolds, assuming it does so at all, the greater the likelihood that we are witnessing the beginning of an intermediate-term rally with a lifespan of perhaps three to six weeks. This criterion would be fulfilled decisively if, within two or three days of reaching the 121^28 target, the futures were to close above it. _______ UPDATE (3:00 p.m. EDT): This prediction worked nicely, since the futures are up sharply today, hitting a so-far high at 121^24.5 that fell just a few ticks shy of our target. A trader in the chat room says he reaped $400+ from the move, but he was the only one I heard from — perhaps because getting long took aggressiveness and initiative that went beyond my analysis.
We hold four September 84-May 84 call spreads with a cost basis of 3.82. We will be cutting it closer than I had imagined in trying to come away with a decent profit, but it should be easily possible if the Diamonds get drawn lower this week, passing once again through the “equator” at 84. The position leaves us somewhat frontspread, since the May calls that we are short will pick up deltas more rapidly than the Septembers we are long if DIA rises. We’re currently short the equivalent of 40 shares, but that would grow by another 160 shares if the stock is trading above 84 come Friday. Maximum profit would be about $120 per spread, or $480 total. That is the estimated value of the September 84 calls with DIA trading for 84 at expiration. Check in intraday if you hold this position, since I would be tempted to take the money and run if we can exit the spread for, say, 4.50-4.60 over the next couple of days.
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What Recovery?
by Rick Ackerman on May 11, 2009 12:01 am GMT · 2 comments
Hopes that the U.S. economy may be emerging from the Great Recession went viral over the weekend, leaping from the pages of the Wall Street Journal into the headlines of every small-town paper in America. Here in Boulder, Colorado, amidst a prom season that saw at least a few kids forego the traditional stretch limousines in favor of parental chauffeurs and, omigod, shuttle buses, the business section of The Camera led with a story about how » Read the full article