Tuesday, September 1, 2009

The bullish penetration of a midpoint resistance at 120^23 augurs more strength over the next 7-10 days to as high as _____.   (The equivalent for the December contract is _____.) Secondary resistance at _____ can be shorted with a stop-loss as tight as four ticks. 

UNG easily punched through a Hidden Pivot support at 10.79 noted here earlier and now appears bound for a minimum 9.89. If you're looking for a tripwire to signal a bullish turn on the very lesser (i.e., one-minute) chart, use the gossamer look-to-the-left peak at 10.97.

Let's try once again to buy at a midpoint support, this  time by bidding 17.06 for 400 shares, stop 16.97, day order. ______ UPDATE (1:15 p.m.): We bought the shares, but cancel the stop-loss, since this trade feels like it's worth risking more than the implied $36 -- especially with AKAM down by nearly 15% in the last three weeks.  The low so far is 17.02, so AKAM could be bottoming.

The bearish impulse leg on the hourly chart formed by yesterday's decline yields an enticing place to try bottom-fishing: a midpoint pivot at _____ (shown). That support should hold if the _____ rally target given here earlier is to retain its promise.

If 1021.50 is not exceeded to the upside overnight, you can bottom-fish with a _____ bid, stop 1011.75.  This is an enticing Hidden Pivot midpoint, but if it's breached we should expect the futures to continue falling down to _____, its 'D' sibling. 

Although we can be certain Americans and their government owe far more than they will ever be able to repay, the question of how this debt eventually will be discharged is the economic conundrum of the day. Some think hyperinflation is the only way out, since it would allow debtors to repay all that they owe with worthless bank notes by then in copious supply. However, this is hardly a solution, since those on the receiving end - i.e. the lenders -- would be ruined, as would the bond markets, banks and all other institutional conduits and agents of saving. We've argued here that deflation will prevail, visiting pain on borrowers more or less in proportion to their sins. Lenders would wind up with the collateral, mainly in the form of residential real estate, but the advantage in this would probably be far less than what has been imagined by those who see bankers as conniving thieves out to steal the whole world's tangible assets. In fact, the bankers would have to rent the homes back to those who had defaulted, saddling themselves with the politically unseemly problem of squeezing blood from a stone. Would they risk stirring up the mob, or would they instead settle up on relatively easy terms?  We don't think they'll have much choice.  Why No Inflation? Our reasoning about such things has always been intuitive -- and so far correct in explaining why the huge fiscal and monetary blowout by the Federal Government during the last two years has produced no significant inflation. This fact is especially telling in the housing sector, which as the inflationists well know was the main target of the government's historically unprecedented fiscal and monetary blowout. Anyone interested in the inflation/deflation "debate," will be abundantly rewarded by reading the superb essay

I don't usually pay much attention to trading volume, but as the accompanying chart makes clear, the tripling of JP Morgan's price during the bear rally of 2009 has been accompanied by a precipitous drop in volume. It's difficult to imagine how this could be other than ominous.