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COMMENTARY for Monday
TODAY'S ACTION for Monday
Rick's Picks for Monday
Two Hidden Pivots beckon above – 1148.25 and 1162.00 — but it’s futile to try and guess when the implied breakout will come. It will almost surely happen sometime between now and New Year’s Eve, but I’d don’t see much value in speculating as to exactly when. If you’re patient enough to watch the 15-minute chart all day long, every day, however, I suspect that it will provide decent camouflage to get long with the uptrend. One such opportunity, with very low risk attached to it, was developing at the closing bell on Friday. I’ve included a chart that shows how it would unfold ideally. _______ UPDATE (10:37 a.m.): Someone in the chat room asked, What’s up with Rick’s ES touts? Wasn’t I bearish before? I still am, but not so bearish that I can’t see the broad averages making marginal new highs into Christmas. My 1148 forecast for ES allows for that, but it hardly classifies me as a bull. I was slow to come around because I’d failed to think through the logic of my Goldman-as-bellwether idea. I had doubted stocks could go significantly higher without the fraudulent bank-recovery story to catalyze buying. I was wrong. With or without a bank story, the institutional lemmings, with more OPM than they know what to do with, have no choice but to continue to buy up stocks till the year’s end.
Correction targets for March Silver equivalent to the ones I’ve provided for February Gold lie, respectively, at 16.450; or if any lower, at 16.390. Bulls could turn things around decisively, however, and send bears into a short-squeeze panic, with a print today at 18.055.
We’re using a Hidden Pivot at 1090.20 as our minimum retracement target for the near term, although a close look at the hourly chart reveals another at 1094.30 from which the futures could conceivably turn higher. Either way, the February contract is likely to correct a further 1.8% or so before it would becoming an enticing buy. Alternatively, buyers would need to push the futures up to 1154.60 today to stampede bears and end this so-far 9.5% correction. _______ UPDATE: If Gold has bottomed and will not require a pullback to 1090, we needn’t wait for an 1154.60 print to turn bullish. Stay tuned to the chat room for camouflage entry opportunities.
Friday’s rally showed a faint yellow streak when it failed to take on a key high at 76.82 recorded on November 3. That wouldn’t be much of a feat if it happens today, as I expect it will, but the fact that the rally didn’t achieve the benchmark on the first attempt argues against the likelihood that we are witnessing the beginning of a bull market in the dollar.
The rally pattern shown in the accompanying chart looks promising for a short at 105.86. The C-D leg has been a tedious grind relative to the quick ABC, but it doesn’t alter the logic or the odds of the 105.86 target eventually being reached. Officially we’ll buy two January 106 puts (DIAMB), stop 106.01.
Silver Wheaton’s nasty fall from a recent high at 17.45 hasn’t much affected the profitability of the option position we established a while back. We have since modified it so that we hold eight December 12.50 calls with an effective cost basis of 0.40 and are short eight January 17 calls for 0.80. Our intention is to exercise the calls and come out of this Friday’s expiration with 800 shares of stock as a long-term position. No further action is suggested at the moment.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
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What Rough Beast Yearns to Be Born?
by Rick Ackerman on December 14, 2009 12:01 am GMT · 18 comments
These are interesting times, for sure — nowhere moreso, unfortunately, than on Capitol Hill. A trillion dollar health bill appears destined to be excreted by Congress before New Years, despite the fact that 57% of Americans (and growing) staunchly oppose it. As recently as last week, it looked as though Joe Lieberman, the Senate’s lone independent, would put the kibosh on this whopping legislative turd when he issued an “over-my-dead-body” statement in opposition to the plan’s “public option.” Lo, there was Lieberman on the Senate floor Saturday afternoon, providing the 60th vote the Democrats needed to overcome a Republican filibuster. Because Lieberman does not drive on the Sabbath, he’d » Read the full article