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COMMENTARY for Tuesday
TODAY'S ACTION for Tuesday
Rick's Picks for Tuesday
Enjoy the rally, but count on me not to get terribly excited about it, at least not yet. If this is the real deal, we should see an effortless extension of the bullish impulse over the next two or three days. That means taking on any or all of the four unbreached peaks immediately above on the hourly chart. It will require a nearly $50 thrust from here to get past the bunch, the topmost of which lies at 1168.90 and the most immediate of which is at 1142.90. Let’s use the higher number as a “bullish-as-all-hell” benchmark for this first week of 2010. For those who remain anxious, let me note that the rally is already impulsive on the daily chart (see inset), and that the bullish implications thereof will hold as long as the futures don’t relapse below 1086.60.
Silver faces some challenging peaks analagous to the four that February Gold will need to surpass this week to begin 2010 with a bang. The topmost lies at 18.385, implying a move of about 4% from these levels. I’ve included a chart that contains a stochastic hint that all will turn out well for the bulls. The divergence between falling price bottoms and rising stochastic bottoms is quite constructive and suggests that buyers will be lusting for more in the days ahead.
AAPL’s vigor is encouraging me to think we’ll be able to spread off our calls just the way I like (“Greed is good!”), shorting two January 240s (AJLAC) for 0.80 apiece against the two January 230s (AJLAY) we hold for 1.00. Accordingly, I’ll suggest offering the January 240s at 0.80 to open, good-till-canceled. If this gambit succeeds we’ll have a position that can produce a profit of as much as $1960 but a loss of no more than $40 — pretty good odds.
We are long 800 shares with a cost basis of 12.55 against eight February 17 calls shorted for 0.40. No further action is suggested at this time. This is a long-term play, and we therefore won’t allow the stock to get called away. However, if the calls finish in-the-money, we’ll have $4,000 of profit built into our position.
The spike on yesterday’s opening brought GOOG within 28 cents of the 629.79 target flagged here last week. We held no position officially, but longs could have taken profits on half of their positions at the high, even if the intention was to replace the stock on the expected pullback. It has amounted to $8 so far, with a low at 621.54 – enough to lower the long-term cost basis of any shares still held.
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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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Heard Any Upbeat Business Stories?
by Rick Ackerman on January 5, 2010 4:41 am GMT · 20 comments
Wall Street traders bought just about everything in sight yesterday, inspired by news of a strong performance by global manufacturers in December and some loose talk from a Fed muckety-muck, vice chairman Donald Cohen, who thinks tightening to head off perceived inflation threats “could be expensive.” U.S. manufacturing reportedly grew at the fastest pace in more than three years, purchasing managers said. Europe and Asia reported similar surges, although we’re having trouble imagining who’s going to buy all that new inventory. Last week, we tried without success to determine just what it is that is still » Read the full article