Goldman swam strongly against the current yesterday, only to reverse sharply in the second half of the session and give up its gains, plus a little. The selloff did nothing to harm the larger uptrend, since it created bearish impulse legs only on the lesser intraday charts. The most recent of them pointed to a Hidden Pivot at 138.75 provided its midpoint sibling at 140.32 fails. As of 12:30 a.m. the stock had gone just a penny below that threshold, but if a breakdown ensues and GS falls to the lower number, I’ll recommend buying 100 shares with a 138.77 bid, stop 138.66. The trade will remain viable as long as 141.90 isn’t exceeded first. _______ UPDATE (11:50 a.m.): The little s.o.b. bottomed in an apparent non-place: 139.29; then it was off an running once again, much as we might have expected. The first tradable impulse leg, though less than impressive, pointed to 144.99, subject to midpoint resistance and possible trend failure at 143.80.
From the monthly archives:
May 2009
The futures have balked en route to a 984.50 rally target that should have been a piece of cake. They also failed to take out a 971.00 peak from May 20 that looked vulnerable. Taken together, these are signs of incipient timidity if not necessarily of weakness, but our suspicions would be allayed if the target is reached within the next day or two. Alternatively, the downtrend in progress at the close looked bound for 940.50 subject to last-ditch support at 945.10, its associative midpoint.
Shortly before midnight, the futures were struggling mightily to achieve a minor Hidden Pivot target not far below at 884.00 If they succeed at this dubious task it would effectively transform the last three days’ price action into noise, adding to a larger picture of gratuitous ups and downs that extends back to early May. To suggest that something more might be occurring or about to occur, we’d need to see a print today below 862.50, since that would create an unsubtle impulse leg on the hourly chart. Failing that, the June contract will remain a challenge to day traders alone, full of sound and fury, but signifying nothing. In the unlikely event this vehicle turns higher into week’s end with a vengeance, our maximum permissible high would be 942.25
Member-only content. Please Login or get a free trial of Rick's Picks to view.
Member-only content. Please Login or get a free trial of Rick's Picks to view.
Let me reassure you that this vehicle looks TERRIFIC from a Hidden Pivot perspective. For one, the apex of last week’s strong thrust exceeded the 375.60 target shown in the accompanying chart by a whopping 10 points. Also, the spike created a fresh bullish impulse leg of daily-chart degree by surpassing a key high at 359.79 recorded back in September. My hunch is that HUI will need to rest for at least 5-8 days before taking its next leap, but if and when that occurs, we can use 391.16 as a minimum objective. Please note that it will have to do somewhat better, exceeding the 413.32 high from last July, to refresh the bullish trend on the daily chart yet again.
Our presumably infallible stock-market bellwether is about to uncork an 8-point rally, provided it can tackle a not-so-daunting midpoint resistance at 142.32 that lies just 25 cents above yesterday’s peak. The actual target lies at 150.72, and the way Goldman has been going, that shouldn’t be more than a day’s short-squeeze away. Accordingly, let’s be ready to short up there by buying two October 110 puts (GSVB). I estimate that they will be trading for around 3.80, but you should be able to narrow it down by watching the bid/offer spread for the puts when the stock gets within a point or so of the target. The 3.80 guess is likely to be somewhat low rather than high if it misses, since put options tend to pick up volatility as a stock rallies. I’ve included a snapshot of my option calculator that shows how I arrived at my estimate. Meanwhile, if opportunity should present itself intraday in the form of temporary weakness, we may attempt to leg into a calendar spread above these levels — a strategy that has produced profits for us in the past. Stay tuned!
At Tuesday’s close the futures looked like they needed to come down to a midpoint support at 943.10 to find traction. This would present a buying opportunity, since the Hidden Pivot is so nicely defined. Accordingly, I’ll recommend bottom-fishing via a 943.20 bid, stop 942.60. Keep in mind, however, that if the support gets pulped, the futures would be telegraphing more downside over the near term to at least 931.40, the ‘d’ correction target associated with 943.10
Bears needn’t cower in fear after yesterday’s bullying thrust, since all the rally did was gap through weak supply created by the two do-nothing days that ended last week’s dirge. The buyers left untested some real supply not far above in the form of three peaks, respectively, at 923.50 (May 20), 927.75 (May 8), and 929.50 (May 7). There is no need to go out on a speculative limb here, since Mr Market will tell us what’s on his tiny, malevolent mind by either getting past those peaks soon or not. If the resistance gives way, however, you can bet that the rally will continue to at least 940.50, the Hidden Pivot of the pattern shown in the accompanying chart.
If Dollar Is Bottoming, Killer Deflation Is Next
by Rick Ackerman on May 28, 2009 1:49 am GMT · 19 comments
Has the dollar put in an important low? It looks like it, since the NYBOT Dollar Index widened the gap on Wednesday between it and a key Hidden Pivot support at 80.04 that we drum-rolled here earlier. We had been using that number as a downside target since late April, when DXY was trading just above 84; it was first touched last Friday, then exceeded by a scant 0.23 points before bouncing back. Now, if the dollar is indeed embarking on a major rally in line with our forecast, stocks are likely to fall, and gold and other precious metals to come under pressure, for the foreseeable future. These new trends may have begun to emerge yesterday, since the Dow Industrials fell 173 points and Comex June » Read the full article