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COMMENTARY for Friday
TODAY'S ACTION for Friday
Rick's Picks for Friday
The most you could say about yesterday’s rally was that it came off a low that fell a tad shy of a 170.37 target shown in the chart. But to confirm this as a bullish sign, the stock would need to create a bullish impulse leg on the hourly chart — a relatively modest feat that will require a print today or tomorrow above 182.45.
After exiting half of our remaining position at 22.45, we hold a round lot whose costs basis has been reduced by profit-taking to 11.01. Let’s continue to have fun with this one, shorting one November 24 call (UMUKZ) for 1.05 or better, good-till-canceled. The offer is based on a 24.47 rally target being reached by Monday or Tuesday. I’ve included a snapshot of an option calculator that shows how fair value for the calls was determined. ______ UPDATE: Cancel the order for now, since AKAM hasn’t shown enough moxie lately to reach the target.
The rally may have looked impressive, but from a Hidden Pivot perspective it only just qualified as an impulse leg on the hourly chart, having exceeded the requisite one internal peak and one external. The short k-A segment means the shallow pullback off the intraday high is a legit B-C leg, at least in theory, but there’s limited value in projecting a target that would be based on a continuation of yesterday’s probably unsustainable trajectory. Anyone looking to get long yesterday needn’t have looked for camouflage, since, on the 15-minute chart, there were no false entry signals the entire way up. That’s typical for all strongly trending days, and if you simply take every ‘X’ entry on the way up, it’s hard to lose..
Going strictly by-the-book, the futures would need to pull back to at least 1040.00 to be recharged for another blistering leg up. Thereafter, it would take a booster rally of 5.40 points to put the December contract on course for a shot to as high as 1061.50. Prospectively, and camouflage aside, the most attractive buying opportunity I could see over the next few days would arise from a pattern that traces out a path similar to the one shown in the chart.
Hold the applause, you dollar fans, since DXY has failed on two consecutive days to turn its presumptive dead-cat bounce into a genuine impulse leg on the daily chart. I’ve labeled the two peaks that the dollar should have exceeded if there is more than hot air driving it. We won’t write it off yet, but the evidence is mounting that the bullish action, deep down, is gutless. Major trend reversals do NOT often begin with this kind of fumbling around.
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This Just In... for Friday
The resignation of Matthew Hoh, a key U.S. official in Afghanistan, is a body blow to U.S. foreign policy. Click here to read his resignation letter, which questions our mission at the deepest possible level.
I’ve often suggested tuning out money-supply definitions of inflation and focusing instead on credit, which has been collapsing. Thus far, however, the collapse has been more than offset by the Federal Government’s expansion of the money supply, according to Frank Shostak, an economist whose work we have featured here before. In a recent article written for Mises Institute, Shostak explains how deflation could arise from a further fall in credit, but only if the credit that is imploding is of the type that has been created out of thin air. Click here to access the article.
Hidden Pivot Webinar & Tutorials
The next Hidden Pivot Webinar will be held on 6/30 - 7/1. This two-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. For more information, or to register, click here.
Economy Red-Hot — If You’re a Bank
by Rick Ackerman on October 30, 2009 1:28 am GMT · 11 comments
The Guvvamint plastered a 3.5 percent GDP growth rate on the marquee yesterday, and traders acted as though the information had come from Walter Cronkite himself. We always expect the stock market to wet its pants when these dog-and-pony shows turn up the wow factor with “Sabre Dance” and a laser show. But did the bond markets have to go nuts as well? We would have thought they had better sense. It’s one thing for whacky » Read the full article