No, you’re not imagining it: Google has conspicuously lagged the financial stocks in the current mania and is even starting to look a bit heavy on the daily chart. We hold a very modest short position in the form of a single September 270 put, so we should be cheered by the fact that the stock is trading less than 2 percent above where it was when we bought the put back in mid-April for $8.
From the monthly archives:
May 2009
An hour-long bounce yesterday from a Hidden Pivot at 918.10 that I flagged in the chat room ended ignominiously with a relapse to 915.20. This implies the futures will now fall to at least 911.50, a Hidden Pivot that you can bottom-fish with a stop-loss as tight as 910.90 Please note that a print exceeding 924.80 would negate this target while turning the minor trend not-very-persuasively bullish. The bigger picture remains bullish and was unscathed by yesterday’s price action, such as it was. One might surmise that precious metals were fatigued from watching the world’s bourses celebrate the regime of paper money by making Goldman Sachs shares the star of their blanket-toss.
Fear that Goldman’s psychotic spree could hit $160 seems to have pervaded the chat room on Monday, so perhaps the stock is actually close to a top. Or maybe not. From a Hidden Pivot perspective, 171.87 is undeniably possible, although it would require yet more of the sort of elongated ABCD pattern that keeps shorts in the game by failing to blow them out in a ghastly day or two. That’s what has been going on so far, and if that ghastly day finally arrives, it could take the form of a final spike amounting to perhaps $20 or $30. Even using a less ambitious projection from the April 21 low yields a minimum 156.24, so this is probably not the stock to short if you want to take a conscientious stand against all of the stupidity. Parabolic blowoff or not, we’ll continue to monitor minor retracement patterns for signs of a turn, since that’s where one would show up first.
Bears shouldn’t get their hopes too high over this, but it is a fact that yesterday’s short-squeeze failed to clear a series of peaks along the “wall” of last week’s decline. This hints that the buying was too gutless to take on any more than the low hurdles posed by a couple of modest highs made on Thursday and Friday. A bullying rally is what it was, and although we won’t hazard a prediction as to where it will end, our hunch is that it will end badly. Meanwhile, on the hourly chart a case could be made for a follow-through to as high as 942.25 (A=862.25, May 1). It is also worth noting that yesterday’s high, 908.75, coincided to-the-tick with that target’s sibling midpoint.
Posted by Rick for Don Cephus, here’s a good list of housing crash links from patrick.net:
- More high-end properties sitting on the market (sfgate.com)
- Multimillion Dollar House Price Cuts (finance.yahoo.com)
- No sign of foreclosures slowing (nctimes.com)
- Silicon Valley Foreclosures To Accelerate (viewfromsiliconvalley.com)
- Las Vegas house prices plummet toward ZIP (lasvegassun.com)
- Mass auctions of foreclosed houses not as successful as billed (tampabay.com)
- Deep Property Depreciation Still Ahead (seekingalpha.com)
- States like California, Arizona and Florida still have far to fall (businesswire.com)
- Worst Is Yet To Come (finance.yahoo.com)
- Personal Credit Crisis Of NY Times Economics Reporter (nytimes.com)
- Who, Me? Yes You, Greenspan! (lewrockwell.com)
- $8000 tax credit not actually for downpayment (boston.com)
- Real Estate Developer Sues Banks That Loaned It Money (businessinsider.com)
- Mortgage modifications make housing dead asset class for years (fieldcheckgroup.com)
- TARP is a “sham” and a ripoff to taxpayers (huffingtonpost.com)
- 99 Years in Prison for Mortgage Fraud. Not a Typo (nationalmortgagenews.com)
- America Forgot Lessons It Taught China (nytimes.com)
- China’s yuan ’set to usurp US dollar’ as world reserve currency (telegraph.co.uk)
- Anatomy of an economic meltdown (sfgate.com)
- Jeff Walser, FDIC Economist, Charged With Attempted Bank Robbery (huffingtonpost.com)
If you come across other good housing stories, please mail the link to p@patrick.net.
Speaking of Goldman's "attitude" today, which someone in the chat room mentioned, it's time to nibble on FAZ, which mimics the Russell Financial 1000 in reverse, 3x. Option implied volatilities are beyond stratospheric, but we can try to get around this by calendar ...
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There’s an unachieved target down at 80.05 but we should monitor the Dollar Index closely right now, since just a little more upside would generate a bullish impulse leg on the hourly chart that could delay or eventually negate the target. Specifically, if DXY pops above 83.46 today or tomorrow, the short-term picture would turn positive.
Goldman’s narrow failure to surpass an autumn peak at 142.00 on the last rally spike suggests that the bear rally’s days are numbered. Getting short could prove tricky, however, since we want to avoid doing so if the stock still has one last lunge left, as it well may. One way we’ll be able to judge for ourselves whether this is likely is by observing the price action on a modest decline to 131.10 That is the midpoint support of an abc downtrend begun on the hourly chart from last Tuesday’s peak, 138.05. We can even try bottom-fishing there with a tight stop, since, if we catch a rally, the profit would give us some ammo to cushion a stop-loss when we subsequently short the nasty little s.o.b. Accordingly, I’ll recommend bidding 131.14, stop 131.02, for a hundred shares. If the stock fails to accommodate with a pullback, we could also try a “camouflage” entry following a print above the 138.96 peak-let recorded a week ago.
Take the Odds Against Banks
by Rick Ackerman on May 19, 2009 1:48 am GMT · 3 comments
The bear rally that wouldn’t die frolicked once again yesterday, leaving shorts badly bloodied and hanging from the ropes. The Dow Industrials, for one, opened sharply higher on a 100-point gap, then just kept going with only tepid pullbacks along the way. The buying spree had been telegraphed the night before when the E-mini index futures appeared to struggle to reach a minor pullback target off Friday’s highs. Because of this, » Read the full article