Friday, August 21, 2009

A  midpoint support at 13.720 beckons, and you could bottom-fish there with a stop-loss as tight as three ticks. If it's hit, though, expect the futures to continue their fall down to at least 13.365.  Alternatively it would take a print at 14.295 to turn the hourly chart bullish. _______ UPDATE (2:52 p.m.) : The futures have trampolined 58 cents from within a penny of the 13.720 midpoint flagged above.  If you caught a ride, profit-taking shouldn't be much of a problem at this point. If you bought more than one contract, I'd suggest holding a third to a half of the position for scale-out selling, but with a stop-loss suited to your comfort zone. (Note: This tout was originally published as a Side Bet, below.)

Some high-minded discussion of our economic malaise, originally published at LeCafe Americain, can be found at this link  (with thanks to the chat-roomer who posted it earlier.) Here's an excerpt: "The most intractable part of the current financial crisis, and the ongoing problem of the US economy is the huge tax which is levied on the American public by its corporations, primarily in the financial and health care sectors, and a political system based on lobbyists and their campaign contributions."

Index futures were giving ground Thursday night, but not so seriously as to suggest that it is sellers, rather than buyers, who are calling the shots. Whatever happens, it seems unlikely to me that stocks will break from August's suffocating, pointless tedium as the week draws to a close.

The September contract has slowly been making its way toward a potentially important top at 1.4647, a Hidden Pivot that is derived from a rally cycle begun in mid-May from 1.3416.

A midpoint support at 13.720 beckons, and you could bottom-fish there with a stop-loss as tight as three ticks. If it's hit, though, expect the futures to continue their fall down to at least 13.365.  Alternatively it would take a print at 14.295 to turn the hourly chart bullish.

There's not much going on, really, but we could still take encouragement if the futures push past  the minor, _____ peak mentioned here yesterday. Otherwise, look for any weakness to hit _____, a midpoint support that is not recommended for bottom-fishing because of its close proximity to this week's lows.

A Hidden Pivot at 76.58 makes a compelling downside objective on the 180-minute chart, but if it fails to arrest the slide, the 72.93 'D' target of a larger pattern will be in play. Both patterns are shown in the accompanying chart. Alternatively, it would take a rally exceeding 80.30 to turn the intraday charts decisively bullish.

UNG's collapse yesterday brought it to within 11 cents of an 11.31 Hidden Pivot target that I flagged during the webinar demo.  I offer the target to all who have been picking bottoms the whole way down, encouraged perhaps by the very bullish outlook espoused a while back by Karim. The risk of bottom-fishing is arithmetically lower now, but surely there are more-opportune vehicles to trade? _______ UPDATE: UNG has bounced sharply this morning off an 11.30 low that lay just one tick from our target. If you bought the bottom, you're on you're on now.

The futures are down seven points at the moment, a tick off their evening lows. So far, it appears to be a routine shakedown to lower the price to more comfortable levels than obtained at Thursday's close. The selling would become more serious, however, if it were to exceed 991.50 to the downside, creating a bearish impulse leg on the lesser charts.  In a bigger picture, because the decline is following the creation earlier this month of a robustly bullish impulse leg on the weekly chart,  we should assume it is merely corrective. A major new leg up would be signaled by a 37.50-point "booster stage" rally from within the pullback range 923-978.