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COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
The futures spent the day struggling to go lower, failing in the end to overpower a midpoint support at 947.60 whose breach would have greased the skids down to 938.70. The bearish pattern is shown in the accompanying chart, and as you can see, the pre-dawn bounce came from a low that lay within a single tick of the pattern’s calculated midpoint. The reactive rally was no world-beater, to be sure, but on balance the picture is at least mildly bullish for the near term. A 978.00 rally target given here earlier remains viable, but like you I am growing a bit impatient about it.
Yesterday’s savaging did no damage whatsoever to the bullishness of the daily chart, although there is still room to fall on the lesser intraday charts. Specifically, a Hidden Pivot target at 158.90 looks like a good place to try bottom-fishing. Officially we’ll bid 158.93 for 200 shares, stop 158.79. We continue to hold the Jan 130 – Oct 130 put spread four times for 3.40 and a September 170 call for 2.00. _______ UPDATE: The bottom-fishing gambit worked out nicely, since the stock rallied $1.08 after making a low at 158.90 around midway into the session. You would have needed to apply a trailing stop, though, since Goldman subsequently relapsed to 158.14 before the closing bell.
Silver effected a promising spike yesterday afternoon, but the futures were struggling to hold onto the gain early in the evening. If they go no lower than 14.940 overnight, however, any rally exceeding the relevant midpoint resistance at 15.155 would suggest additional upside potential over the near term to as high as 15.365.
The rally looked altogether unimpressive until late in the session, when a fleeting spike surpassed a look-to-the-left peak at 78.91 that I’d flagged in the chat room. That gives the rally nominal appeal on the lesser charts, although we should require 79.79 today to validate it. The location of the obscure but important peak-let this would surpass is shown in the accompanying chart.
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Tesla got short-squeezed to within 28 cents of the 86.72 target I’d proffered early Monday morning, but a second-wind rally to 88.00 suggests it’s got eyes for 104.44, the ‘D’ target associated with the first number. It can serve as a minimum upside objective for now, implying that all trades between here and there be positioned from the long side. We’ll plan on buying weekly puts if and when the target is reached, provided it happens before Wednesday of the given week. Please note as well that a lesser Hidden Pivot at 94.19 (see inset) has the potential to stop the rally cold and can therefore be used for spec camouflage shorts.
All signs point higher at the moment, but even Google will have to top somewhere. My best-bet for a short-able apex is 929.78, the Hidden Pivot target of a well-defined ABCD on the monthly chart (see inset). You can try shorting with camouflage at that number, or at the D target (in purple) of the lesser pattern, but until then all trades should incorporate a bullish bias.
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SIDE BETS for Wednesday
Below 999.75, there were no more Hidden Pivot targets to project yesterday using the hourly chart. That is still the case, although we can use the breach of a look-to-the-left peak at 1009.50 to signal us when ES is turning around.
Hidden Pivot Webinar & Tutorials
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Bank Scare a Ruse to Shake the Tree
by Rick Ackerman on September 2, 2009 12:22 am GMT · 6 comments
A run on a major U.S. bank? Who could have been spreading such scurrilous rumors? They surfaced yesterday in the Rick’s Picks chat room, and elsewhere, not long after we’d done some personal banking ourselves in an online account at the very same bank. We experienced no delays or problems with the transaction, notwithstanding reports of a “default situation” and “elevated” buying of put options on the shares of the bank. We were able to confirm that there had indeed been a flurry of put-buying, but the action was not so frenetic as to suggest that the bank was in any serious trouble.
To the contrary, banks are operating under such loosey-goosey rules right now that they shouldn’t have a care in the world. Imagine having a notarized letter from your local police chief authorizing you to loot and plunder any store in the neighborhood without fear of arrest. That’s how the banks are doing business these days – which is to say, however they want. And if a deal should turn sour it’s no problem, since the U.S. government has assured banks that it will pay 100 cents on the dollar for any securities that ultimately fail to clear the market.
Smoldering Ruins
Tuesday’s rumors of a big bank on the ropes evidently were prompted by general weakness in banking shares. The selling had been attributed to nervousness over the prospect of more losses to come in the banking sector. A few analysts added to the stresses of the day by speaking cautiously about bank shares. Has the spectacular rally begun last November finally run out of steam, they asked? We seriously doubt it. More likely is that those who have been accumulating bank shares hand-over-fist simply backed off their bids for a day, allowing the stocks to fall to more appealing levels.
Bloomberg, CNBC, the Wall Street Journal and all the rest bought into this ruse with a deluge of commentary concerning how financial stocks supposedly have gotten too far ahead of “fundamentals”. Fundamentals!? If the day ever comes when fundamental analysis is applied rigorously to securities markets, the financial system will be reduced to a smoldering ruin in mere days. For the time being, though, the bankers are enjoying a holiday from scrutiny that makes all things possible. Under the circumstances, with Tammany Hall sensibilities determining the course of the financial system, we should not be looking for a top in banking shares, only an occasional pause in their upward spiral.
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