Friday, June 26, 2009

In night trading Thursday, Da Sleazeballs lacked the guts to push the futures above supply piled near 920 earlier in the week. In any case, a print today exceeding 924.25 would probably touch off a short-covering stampede that will carry into next week.

The futures looked prime for a thrust to _____ at yesterday's close, although, as noted in the chat room, there are doubts about the sausage-y nature of the price pattern yielding that target. Even so, the fact that all three price coordinates -- A, B and C -- are single-bar beauties seems reason enough to overlook the pattern's flaw and to simply go with appealing look of it.  If this analysis is correct, crucial resistance lies at _____, the target's midpoint sibling, and any pop above that number will be telegraphing a further rally of at least $14.

The short-squeeze mania that sent stocks blithely higher yesterday reminded us that shares are likely to remain erratically buoyant at least until the end of the second quarter.  "Rebalancing" has been the name of the game since the bear rally began in early March, and portfolio managers are unlikely to alter their allocation strategy with less than a week to go before they get their final "grades" for the quarter. Meanwhile, if there was any doubt about the aggressive institutional tilt toward shares during Q2, they were refuted by a friend of ours who recently moved his wealth management business from one brokerage house to another after being a star at the former for more than 30 years.   Our friend has done extremely well for his clients over the long haul, mainly by being in and out of stocks at the right time. (For the record, he just bought U.S. zero-coupon STRIPS of 2037 for his own portfolio.)  In recent months he had his clients more heavily in fixed-incomes than his employer would have preferred. They put the screws to him, insisting that he boost his clients' portfolios to 75% equities, and that's when he decided to bolt.  One might have thought they'd cut him some slack, since he has consistently ranked among the very top brokers in the U.S. But the company's "culture" has changed radically under new management, and many of his colleagues, including the top brass, have abandoned ship. We'd love to short the stock of this company, except that it is no longer publically traded, having been absorbed by a giant of the banking industry whose name will go unmentioned.  Parabolic Spike Regarding the ongoing, though presumably doomed, resurgence of shares, it wouldn't take much for DaBoyz to tighten their grip on the scrota of bears,

TLT is stealing up on an important resistance at _____. That's a Hidden Pivot clearly visible on the hourly chart, and if it is exceeded on a closing basis TLT would be telegraphing still more strength in the long bond. For now, we should regard _____ as a minimum objective, implying that long-term yields have further to fall before they get sticky. 

If 70.93 has not been exceeded first, you can bottom-fish 67.69 with an initial stop-loss as tight a 10 cents, good through Tuesday. That's the Hidden Pivot midpoint of the downtrend begun from 72.85  on June 19.  Switch to a 25-cent trailing stop if 70.20 is reach on the bounce. Minimum objective: 70.65. _______ UPDATE: 70.93 was exceeded overnight, negating the trade. The new high created a new Hidden Pivot support at 68.05, but it is not suitable for bottom-fishing because it coincides with a visually important low made a couple of days earlier. 

The broad averages looked pumped at the close, but as of early Thursday evening shorts were keeping their cool, since the E-Mini S&Ps were actually fractionally lower.  I'll have a look later tonight, so check in around midnight EDT if you want to be apprised of the latest.