All signs were pointing higher at the end of yesterday’s regular session, although it was only on the lowly five-minute chart where Wednesday’s rally managed to look like hot stuff. There’s little point in projecting a Hidden Pivot top, since any thrust is destined to do battle with heavy supply around 1015. (For the record, there’s a Hidden Pivot resistance at 1013.50, subject to the lesser resistance of a midpoint at 1002.50 .) The futures topped near 1015 on three separate days in the last two weeks, and a mere bluff is not apt to get past thoe tops without some frenetic short-covering to provide some cover.
From the monthly archives:
August 2009
I had to check Edwards & Magee to see whether yesterday’s weakness may have compromised the bullishness I inferred from the island gap reversal in this stock. My guess is that the renowned authors of Technical Analysis of Stock Trends would have seen it as a mutant specimen of the genre to begin with, since the two gaps do not overlap. In any event, if we simply look at it as a routine abc pattern, filling in the gaps with hypothetical, unbroken bars, as we are wont to do, a 155.25 downside target comes into focus, subject to a bounce from the 158.07 midpoint. In fact, the bounce has occurred from 158.00, so we might infer that a dive to 155.25 awaits if the midpoint is breached decisively.
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The bonds have looked pretty good these last couple of weeks, but it’s been nearly two months since any rally managed to create a bullish impulse leg on the daily chart. There have in fact been three failures to do so, and this will make a fourth if it fizzles out anywhere south of 122^10.
It’s do or die here, since UNG looks likely to grope its way down to at least 11.31 if it doesn’t pick up support from mid-July’s lows near 12.
The maniacs who dominate in this stock left a relatively rare and unquestionably bullish island-gap reversal on the hourly chart yesterday, threatening bears with a frontal assault if they should grow too bold. Since Goldman is still our favorite bellwether, we should take the threat seriously to the extent that the stock is capable of dragging the entire market higher if it catches fire. I had suggested a mechanically inspired short in the SKF Ultrashort Financials — a bullish play on the banks — and this latest development in Goldman seems to explain why SKF’s rally could be short-lived. Instead of shorting SKF, though, let’s speculate modestly in Goldman, bidding 2.10 on the opening for two September 170 calls (GPYIN). If the order goes unfilled, lower the bid to 1.90 and leave it in for the remainder of the day.
The downside target at 17.04 is still valid, so let’s try bottom-fishing there once again by bidding 17.07 for 400 shares, stop 16.89.
The rally off Monday’s secondary low (931.80) projects to 945.40 – 1.50 points above yesterday’s high. The target is still valid, although it would have made a better short if it had been hit on the first try, a modest spike this evening around 8:30 p.m. EDT. What matters most at this point is not that a would-be opportunity has curdled, but that the futures are not showing enough oomph, even, to reach a relatively easy target. That could still happen tonight or Wednesday morning, but I’d need to see a thrust exceeding 946.20 to be convinced that buyers are capable of taking charge. With a 950.70 print, they would BE in charge.
How Quickly Could the Dollar Collapse?
by Rick Ackerman on August 20, 2009 1:07 am GMT · 20 comments
We popped up on the “wrong” side of the inflation/deflation argument here the other day with a hyperinflation scenario that seems to us not just possible but likely. Although we hold fast to a prediction that deflation is going to run its course, throwing tens of millions of Americans into bankruptcy, before relief comes to debtors, we are persuaded that at some point well down the road the U.S. will throw the switch to hyperinflate. Even so, we believe that the attendant collapse of the dollar will play out far more quickly than the » Read the full article