Monday, May 11, 2009

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

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

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

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 "The Worst May Be Over." And what news prompted this sunny reading of the statistical tea leaves? Here's how the Associated Press story began: "A better-than-expected unemployment report Friday - job losses declined to the lowest level in six months - capped a week of encouraging news, including firmer home sales, a revival in consumer spending and fresh optimism about the biggest U.S. banks."  A drop-headline put it in better perspective: "13.7 Million Americans Are Still Unemployed." Elsewhere on the page, in the News Briefs section, a slightly more skeptical tone obtained: "As far as Wall Street is concerned there is no bad news anymore. At least for now, traders are seeing news about longtime trouble spots like banking and unemployment in a strictly positive light."   Not to impugn the sage judgment of traders or cast doubt on their prescience, but there must be at least twenty-five million homeowners who see things differently. Very differently. After all, how optimistic about the economy can one be if one owes $50,000 to $300,000 or more on one's home than it's worth? A conservatively estimated third of U.S. homeowners are in this boat, and we doubt any of them are quite so confident as "Wall Street traders" that a recovery is at hand. To the contrary, Main Street remains deeply troubled by such discouragements as bullish traders

Gold has unfinished business above these levels, since last week's choppy rally fell about $8 shy of a target I'd broached at ____. Price action Sunday night evinced the usual gratuitous hysterics, but there was nothing very promising on the intraday charts that I could recommend to night owls. We can use