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COMMENTARY for Thursday
TODAY'S ACTION for Thursday
Rick's Picks for Thursday
We took a good look at the August futures during yesterday’s tutorial session, finding a few reasons why this rally should hit $1000 even if it is not the one that’s going to get us to the Promised Land. Two things to notice: 1) the last selloff failed, by a few dollars, to reach an $899 target that I’d flagged as a minimum downside objective; and, 2) the subsequent reversal has had little difficulty banging out a series of fresh impulse legs on the hourly chart. So what would it take to suggest the intermediate-term picture is more than just moderately bullish? Answer: An uncorrected thrust from 940.10 to 966.80, creating a bullish impulse leg on the daily chart (see inset). We’ll wait for this crucial piece of evidence before we get excited about the promising move off $900. _______ UPDATE (from the chat room): The daily chart shows a pattern that got shapelier with yesterday’s rally: A=882.00 (April 30) and B=992.10 (June 3). It yields a ‘D’ target at 1014.90, with a midpoint at 959.90 that can serve as a minimun upside target for the near term.
We hold a September 270 – September 510 strangle for 13.20 that we legged into and then gave up for dead, not for no good reason. A payoff is still a longshot, but the way the stock has been moving lately, it couldn’t hurt to remind ourselves that we do have a horse in the race. From a Hidden Pivot perspective, Gluggle could run up to as high as 553.87 — and how would your strangle look then, Fast Eddie?
We legged into the September 10-July 10 calendar spread a while back at such a great price (a 0.60 CREDIT per spread!) that even when the stock fell 35% from recent highs near $11, we still had a lock on a minimum $240 paper profit. Since the four July calls we are short are expiring on Friday, let’s roll the spread once again, buying (i.e., covering) the Julys while shorting four August 10 calls (SLWHB) — all for a net credit of 0.30. On this gambit you can take a leg if you want, first buying back the Julys for 0.05 — the lowest price possible for a retail customer (professionals can buy them for 0.01 “in the cabinet”).
Yesterday’s rally created an impulse leg on the daily chart, so we don’t want to be too quick to write it off as just another gratuitous ejaculation. Instead, we’ll treat it as the possible resumption of the bear rally begun in early March, with upside potential to as high as 998.50. That would be equivalent to a 600-point move in the Dow, so there is ample reason for us to get in bullish gear now rather than spectate with disdain and vitriol in our hearts.
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INTRADAY TRADING NOTES for Thursday
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SIDE BETS for Thursday
The last two thrusts have been impulsive on the hourly chart, implying the rally is likely to continue. If so, we can use a Hidden Pivot at 62.98 as our minimum upside objective. Its associative midpoint is 62.13, and so a decisive breach of that number would be telegraphing a likely continuation to at least 62.98.
A Hidden Pivot at 13.395 was as high as we could have projected for yesterday, and although the futures stalled a hair shy of it, any progress above that number today would portend additional upside to at least 13.725 over the very near term.
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A Hula Dance in Our Future?
by Rick Ackerman on July 16, 2009 12:01 am GMT · 9 comments
The Dow Industrials lurched 256 points higher yesterday, but a trader looking for action might have found himself bored to tears nonetheless. Indeed, anyone who failed to go home long the day before would have been left twiddling his thumbs Wednesday morning, since stocks bolted for the wild blue yonder on the opening bell. Like nearly all powerful rallies, the move began with a short-covering panic. However, this one was quite unusual in that it had begun on a gap at the start of after-hours trading the evening before. We can’t remember the » Read the full article