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COMMENTARY for Friday
TODAY'S ACTION for Friday
Rick's Picks for Friday
Yesterday’s rally was noticeably lacking in oomph, having failed not only to reach a 1023.50 Hidden Pivot target by eight points, but also to surpass the less challenging resistance represented by last Friday’s 1016.00 high. The 1023.50 target has been supplanted by a new one at 1027.50, and it should be easily reachable if there’s even a mild whiff of Friday craziness in the air. _______ UPDATE (1:15 p.m.) The aforementioned lack of oomph has drawn fresh inspiration this morning from collapsing consumer confidence. The Michigan number — surprise surprise!! — came in well below expectations. Some enterprising reporter for the Times or The Wall Street Journal ought to do an expose on the apparently clueless hacks whose “expectations” are taken so seriously but which more often than not are flat-out wrong. Couldn’t any one of us do as well or better with a dartboard?
The rally’s stall at 963 yesterday validates a yet-to-be-achieved rally target at 982.60, since the target’s midpoint sibling is 962.40 — just 0.70 from the intraday high. The target looks like it’s in-the-bag to me, but I’ll be watching to see whether the futures push past it without much fuss, presumably drawn by a magnetic supposed barrier at $1000. _______ UPDATE (1:03 p.m.): Gold relapsed into randomness today with a presumably gratuitous dive that has so far failed to breach the 942.10 low (aka “point C”) from which the midpoint and target given above were derived.
I’m going to consider the calendar spread as having been closed out for 0.40, which, when added to the 0.90 credit that was our cost basis, yielded a theoretical profit of $520 minus commissions. We’ll try to re-establish a long position, but let’s do it when SLW is weak rather than rallying toward the daunting resistance peak at 10.97 recorded in early June.
A rally target at 15.880 broached here earlier is in play, and we should be encouraged to think that it will be reached soon because the futures closed yesterday above its midpoint sibling, 15.050. The target is sufficiently compelling that we should expect a stall there. However, if it impedes the bulls’ progress for perhaps an hour or less, that would suggest there is more buying power waiting to be unleashed next week.
It’s not for no good reason that Goldman’s spectacular bull run has stalled where it did, at 170.94. Notice in the accompanying chart the high at 172.45 made last September. That is not what we call a “look-to-the-left” peak, since it lacks the whimsical subtlety that we look for in such peaks. Rather, it is a very crucial and obvious peak because Goldman fell apart right after it was recorded. Sellers up to this point have been trying to get their money back, or perhaps make a few bucks, but anyone still holding for a thrust above 172.45 is probably on board for the long haul. Odds of a “false” breakout seem low, but if the stock were indeed to collapse from a high above 172.45, it would rank as one of the wickedest bull traps in memory.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
SIDE BETS for Friday
I’m straining for clues that might help predict the outcome of this epic battle between bulls and bears at cliff’s edge. A bounce from a midpoint pivot at 78.16 would tip the bias bullish, since that would at least delay a further fall to its ‘D’ sibling at 77.81.
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Inflation No Threat in Collapsing Economy
by Rick Ackerman on August 14, 2009 12:01 am GMT · 15 comments
I’ve harped endlessly on the point that stagnant-to-falling incomes, soaring joblessness, imploding credit and collapsing asset values make inflation nearly impossible at this time. Here’s our friend Senor Cuidado once again, explaining this more lucidly than I have. He is responding to statements (in boldface) posed in the Rick’s Picks forum by “Edward,” who is » Read the full article