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COMMENTARY for Thursday
TODAY'S ACTION for Thursday
Rick's Picks for Thursday
The dollar has been defying gravity, technically speaking, but we should never assume the Powers That Be are simply going to let it collapse — especially while the stock market’s silly rally holds the masses in a state of delusion. DXY has indeed pulled back from the brink, but not in very impressive fashion, since there is not even an impulse leg on the hourly chart to suggest the rally is likely to go somewhere. For now, let’s set a bullish alert at 79.79, a single tick above an obscure look-to-the-left peak recorded July 15 on the way down.
Which way will December Gold break when it emerges from a pennant that has been forming since late July? Signs point lower, but if that’s the case, there may be a good buying opportunity down at 928.10, a Hidden Pivot with a fine pedigree (see chart). Stay tuned! (Note to pivoteers: I am not using the one-off ‘A’ to project a target in this instance because the chop that followed the more obvious high did not exceed any prior lows.)
We hold the January 130-October 130 put spread four times for 3.40 and are still looking to hedge the upside exposure thereof. Let’s bid 2.40 today for a single September 170 call (GPYIN), good as long as the stock is trading 165.20 or higher. Our bid is on the stingy side, but I would not recommend paying up if we get close. _______ UPDATE (12:50 p.m. EDT): Cancel the order. The stock had to fall below 164 before the September 170 calls traded at our price. This implies that option volatility increased as the stock fell. The stingy bid I’d recommended was predicated on option volatility declining with a gentler fall in the stock. The fact that options get relatively juicier as certain stocks falls is Mr Market’s way of making certain that anyone who uses option leverage to buy the dips in world-beating stocks such as this one will pay a very hefty price for betting on the favorite.
Day three of airless tedium was even more (i.e., less) impressive than the two days that preceded it, yielding an intraday range of exactly 11.75 points. I suggested taking the day off to those who attended yesterday’s tutorial session, but it might even be possible to stay away until Labor Day without missing much. The prognosis is bullish nonetheless, although I would expect the futures to drop beneath the lower threshold of the three-day range — meaning below 1018.25 — to get some running room for the next thrust. A 0.618 retracement of the rally begun a week ago from 976.75 would bring the September contract down to 1000.00. I would suggest buying near there only if there is a camouflaged ABC rally to get you on board. ______ UPDATE (3:51 p.m.): The futures have followed the script given above, falling to 1015.00 this morning before roaring back with a strong impulse leg on the hourly chart. Bears should consider this a shot across the bow.
A feint lower today to 71.26, a Hidden Pivot that comes off the 15-minute chart, can be bought umtil the final hour with a stop-loss as tight as 21 cents. As is the case with all Side Bets, you’ll be on your own if the order fills. _______ UPDATE (12:54 p.m.): Crude tends to reverse within 21 cents or less of Hidden Pivot targets on the intraday chats, and that’s why I suggested the stop-loss given above. However, this time the trend reversal came from a low that fell shy of our bid (by 19 cents!), rather than overshooting it, so we did nothing on the order. Cancel it, since sloppy seconds are not worthy of further effort. [Note: This trade was originally posted as a Side Bet.]
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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.
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Abolish the Fed? That Dream’s Dead for Now
by Rick Ackerman on August 27, 2009 12:01 am GMT · 15 comments
There was discouraging news yesterday for anyone hoping that Rep. Ron Paul’s bill to abolish the Federal Reserve might make it to the floor during the current Congressional session. The way things look right now, H.R. 2755 may not come up for a vote for quite a while – at least for the duration of Mr. Obama’s presidency. By nominating “Helicopter Ben” Bernanke to a second term, the President made clear that the political champions of a so-far catastrophically unsuccessful status quo will continue to rule our economic lives, at least for the foreseeable future. If that weren’t bad enough, Mr. Bernanke’s “success” is » Read the full article