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The futures were struggling to go lower shortly before midnight — much as they did Sunday night when they telegraphed the next day’s strong rally. Just below, the nearest Hidden Pivot support lies at 900.00, a midpoint whose ‘d’ sibling is 893.75. However, both numbers were getting shunned — a development that hinted of more rough times for shorts come Wednesday. Night owls can buy-stop 908.75, a tick above a tiny peak whose breach would turn the 5-minute chart bullish. This advice applies only if the rally does not correct after exceeding the first peak at 906.50 — and you’ll be on your own if the order fills. Alternatively, the least risky place to try bottom-fishing overnight would be at 900.25, stop 898.75. _______ UPDATE (10:15 a.m.): The buy-stop would have worked nicely, since the futures rallied five points after touching it. However, long positions would have required tending overnight, since the futures dipped six points from the earlier high before taking off anew. It should be clear to all by now that this rally is now being driven 99%+ by short-covering – and that pretty much everyone is as bearish and skeptical as we are. It will probably take an absolutely ruinous, once-in-a-lifetime blowoff to cure that condition.
We’ll breathe easier when the futures finally push above 935.80 but the significance of the move won’t be as bullish as before, since the rally has been interrupted by a so far three-day correction from the recent high at 934.80. I hesitate to read too much into it, but my hunch is that this subtle sign of timidity portends an unsuccessful struggle if Gold should approach the $1000 barrier within the next few weeks.
A Motley Fool e-mail promotion that I received yesterday piqued my interest in this former ”cloud” computing hottie, which they rate as the best investment opportunity since Microsoft went public. Coincidentally, AKAM’s recent high at 23.58 created a “camouflaged” impulse leg that looks tempting to buy. Since the stock has already tripped a buy signal for a ride to as high as 24.67 over the near term, let’s try a modest speculation by bidding 0.90 for four August 25 calls (UMUHE), good through Thursday. Our bid is a nickel off recent lows, and I would not advise paying up. _______ UPDATE: We bought the calls for 0.90. Our strategy will be to spread off the risk if and when AKAM rallies, but for now sit tight.
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R.I.P., California
by Rick Ackerman on May 20, 2009 1:04 am GMT · 9 comments