Thursday, August 13, 2009

I expect GOOG to hit 474.92 at the least, but if the stock can get comfortably above that midpoint pivot (on the weekly chart), its 'D' sibling at 553.87 would be in play.

The weekly chart suggests upside potential over the next 3-4 weeks to as high s 3.1465. More immediately, a Hidden Pivot at 2.9745 can serve as a minimum upside objective, while anything below 2.7905 today would warn of further weakness.

UNG pounded on the trendline flagged here yesterday, suggesting that it wants to go lower, perhaps to test the 12.32 bottom made on July 29. Alternatively, it would take a print at 13.00 to turn the lowly 15-minute chart bullish.

With Silver Wheaton stealing up on $10 and expiration a little more than a week away, our calendar spread will be an increasingly easy sale for 0.50.  Yesterday the August 10 calls that we need to cover traded as low as 0.11, so I'd suggest paying no more than 0.05 to close them out as long as the stock is 9.75 or lower. we hold four Sep 10 - Aug 10 call spreads for a 0.90 CREDIT, implying a paper gain of $360.  That would be augmented by the amount for which we close out the calendar spreads.

Last week's high at 27.70 fell well shy of a Hidden Pivot target at 28.74, so there's still room for the Dollar Index to fall anew (it moves inversely with UDN).  A two -day close above 27.53 would signal the likelihood of renewed weakness in the greenback, since that's the midpoint pivot tied to the 28.74 target.

Seven consecutive days of gratuitous slop have left me no handholds for a meaty forecast, but ______ would be my stab-in-the-dark for the top of whatever rally DaBoyz may be cooking up.  Alternatively, any attempt to project a downside target is stymied by would-be impulse legs that break too many rules, even on the very lesser charts.  

The Dollar Index turned heavy exactly 27 cents shy of a key peak at 79.66 recorded on July 29, hinting that there is not as much wattage behind this rally as we might have imagined a day earlier, after bulls racked up their third straight day of gains.  Tradestation is choking and wheezing on my command to display an intraday chart for DXY, but I'll provide further analysis if their tech support can resolve the issue by tomorrow.

The futures looked bound for _____ when the regular session ended yesterday. That's a 'D' target of an uptrend whose sibling midpoint lies at _____, exactly ____ cents above Wednesday's high. The latter number can serve as a minimum upside objective for Thursday, but if it's exceeded on the close or by more than eight cents intraday, take it as a sign that the higher resistance will be achieved.

We offered an S&P 500 chart here a while back that was intended to show how a very powerful rally over the next 18 months would not change a long-term picture that remains very bearish to this day. The S&Ps were trading around 900 at the time, but we added 18 bars to the monthly chart in order to help readers visualize a steady, spectacular climb to 1400 by early 2010.  We are much too bearish on the economy to think that such a powerful rally is in the cards. However, "thinking" about this market is not necessarily the best way to understand it, since the uptrend seems to be driven not by rational thinking, but by the wantonly mindless flight of Other People's Money into equity shares. For that reason, we have purged nearly all of the "thinking" from our analysis, the better to focus on the coldly mechanical facts that technical analysis affords. Which brings us to the chart above. It shows how the S&P 500 Index would look on a weekly chart if it were to fall quite sharply, losing about 25 percent of its value over the next four months. Permabears - and we unapologetically include ourselves in that group -- would probably get pretty excited about this, since it would suggest that stocks were at long last responding to events in the real world -- most particularly to a debt deflation that threatens to wreck capitalism for at least a generation. In purely technical terms, a 25 percent pullback within the massive bear rally would feel right as rain, since it would fully correct the very powerful AB "impulse leg' shown in the chart. That leg surpassed two "external" peaks on the weekly chart without pausing for breath, hinting that no matter how much the