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COMMENTARY for Saturday
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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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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Rick’s Picks Weekend Edition
by Stephanie DeMaria on August 15, 2009 12:01 am GMT
Is Wall Street Ready for Obama’s Fall?
The stock market’s powerful bear rally, now five month’s old, has fed on false hopes and delusional thinking, but it is unlikely to survive the coming collapse of the Obama presidency. Mr. Obama’s once-overwhelming popularity, though ebbing, has so far survived the voters’ growing discontent with his policies. However, disapproval is mounting, even on the political left, and it’s going to reach critical mass once the president’s ill-conceived plan for a government takeover of the healthcare system has gone down in flames. He will become a lame-duck president after less than a year in office…
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‘All Roads Lead to Deflation’
When we dropped out of the inflation/deflation debate a while ago, we asked the inflationists to wake us when the price of suburban homes reached a quadrillion dollars. Wouldn’t that be nice for the fifty million or so Americans who owe more on their homes than they’re worth! Anyway, the topic continues to percolate in the Rick’s Picks forum, including this recent, astute post from “Senor Cuidado”. Like us, the Senor doubts inflation is lurking around the bend:
Tahoe Billy, you priced gold and eggs but you left out oil. Oil is key to the U.S. economy. With gold at $3,000, what is the oil price going to be? And how are Americans going to afford the new stratospheric oil price? You also left out any interest rate prognostication. My advice is to read bloggers Ackerman, Shedlock, Denninger et al. and get a handle on…
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2009 Promises to Get Tougher
(Here’s the latest dispatch from our friend and colleague Larry Amernick, who thinks any stock-market corrections in the offing are going to be shallow. If you’d like to sample his work, e-mail him at: Amernick@comcast.net.)
Time for some straight talk about the stock market, since nothing has improved fundamentally. Congress has passed no financial reform, the Federal Reserve is financing a new equities bubble on Wall Street, and the real economy is on life support. According to our technical runes, the market is overbought but unlikely to correct more than 7 percent…
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A Scenario to Trap Both Bulls and Bears…
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…
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Inflation No Threat in Collapsing Economy
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…
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