Wednesday, October 7, 2009

Assuming Goldman shares lead the market higher, I've provided a long AND a short in the stock so that you can take your choice.  This one is listed as a Side Bet rather than a Pick of the Day because long entry may require expert assistance in the chat room.

My minimum rally projection for the very near-term is 192.91, a Hidden Pivot that you can short with a stop-loss as tight as you please.  If you'd find more pleasure looking for the implied ride higher, you'll need to use a 25-tick bar chart for a camouflage entry. The key peak to reference -- one that few in the trading world will be looking at -- lies at 187.32. I've sketched the ABC for you and will note that this one is very unlikely to let you down if things play out as I've indicated. Chat room help should be sought if you're interested, since this is for experts.

The rally doesn't seem to have much oomph behind it, since each new thrust is hesitating just shy of impulsiveness on the hourly chart. This implies that bottom-fishing the T-Bond futures may be worth the effort.  If so, the nearest downside target in the December T-Bond, currently trading around 121^30, lies at 121^12. ______ UPDATE:  Today's strong rally in the Bond futures corroborated intimations of weakness in the TBT UltraShort. The December Bond trampolined from a low at 121^26, so we didn't have a chance to board at the bottom.

We should welcome a stall precisely at 17.840, since a decisive breach of that midpoint pivot would strongly imply the futures will reach 19.920 once they've consolidated.  More immediately, the December contract is headed for a rendezvous with the 17.690 peak recorded in mid-September. If the resistance gives way easily, another 25 cents of upside should come painlessly.

The futures looked to be munching through trendline resistance with the aplomb of termites testing the edges of a weathered barn. If  They should pop the December contract above the 1075.75 high recorded two weeks ago, they'll probably be unstoppable below 1100.75, a Hidden Pivot that comes off the 240-minute chart reproduced alongside.

Now that's more like it! The 1074.50 target is still the most crucial benchmark above, but this installment of the rally should get us pretty close -- i.e., to at least 1067.00.  The midpoint pivot associated with that last number is 1026.20, so a 15-point drop from these levels should be cheered by bargain hunters rather than feared. It is at that level where you might look for camouflage to enter (or perhaps re-enter) using the most subtle uptrend you can find.  Camouflage may still be possible without a pullback, but because the trend will by now have enticed even the doubters, camouflage will not be so easy to find.

On the Rick’s Picks web site yesterday, we featured a link to Mish Shedlock’s latest, lovely essay concerning deflation. We thought we could avoid getting drawn into the debate ourselves, but it was not to be: the topic touched off quite a firestorm in the forum that began with this introductory note on the home page: “We stopped ‘debating’ the inflationists a while back simply because their arguments had become too bloody stupid to endure. Obviously, they have not been playing with a full deck, since they continue to obsess over the absolutely useless textbook definition of deflation – ‘a decrease in the money supply.’  Rather than have you become confused by all the drivel…concerning the money supply, which virtually no one [really] understands, we would rather that you see deflation for what it is [in our lives]: an increase in the real burden of debt. “One of my ablest comrades-in-arms has been Mish Shedlock, a deflationist with more patience than I when it comes to dealing with the factually challenged.  In his latest commentary, Mish mostly agrees with some points concerning deflation made by David Rosenberg, an economist who has earned our respect. Click here  to access the article.” Drudgery We admit that it has become drudgery to parry the inflationists’ tired, old non-arguments. We’ve been writing about the  subject since the mid-1990s, when there was no one to argue with. Back then, deflationists lay beyond the economic pale, and only two guys that we can recall even used the word: Ashby Bladen, a permabear who wrote for Forbes; and Bill Helming, an agricultural forecaster who was worried about Third World debt. We not only used the’D’ word at every opportunity, we asserted – in Barron’s and in the regular column we freelanced to the Sunday San Francisco Examiner – that deflation was absolutely unavoidable.  In