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COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
February Crude pushed passed a midpoint resistance at 79.02 on the weekly chart so easily that there should be little doubt as to whether it will achieve the ‘D’ target associated with that number at 87.20. Oil pushing toward $90 would have been seen as a major economic threat in bygone days, but we seem to have gotten so used to $70-$80 oil that perhaps it will barely provoke a discussion.
The 1132.50 rally target posted here last week nailed yesterday’s top, providing an opportunity to get short a tick off the top ahead of a piddling, 6.50-point pullback. The futures got second wind enough to go nowhere, making a secondary high at day’s end that exceeded the opening-hour spike by a single tick. This action has become far too tiresome and coy for me, but before it puts me to sleep let me reiterate an 1146.50 target that seems only slight less likely to be achieved than the sun is to rise yet again in the East. This number is of course short-able with the most daringly tight stop-loss you can abide, but if you have designs on catching the perhaps more lucrative ride north, you’ll have to supply the patience and the camouflage.
Yesterday’s funereal rally may have extended Gold’s winning streak to four days, but it was quite a bit less than we might have wished for. Notice how it apexed without taking on the look-to-the-left peak recorded on December 17. Such tired action demands that we set the bar high today, and so we shall: at 1143.40, a crucial dime above the peak I’ve circled. Even so, a lesser thrust that pulls back after barely exceeding 1132.30 could yield an excellent camouflaged buying opportunity with relatively little risk.
AKAM is closing on a 27.15 target flagged here several months ago. We hold a round lot with an adjusted cost basis of 11.01, giving us a paper profit of more than $1500 at current prices. I’d suggested shorting an in-the-money call when the stock reached the target, but we’ll probably do better selling something closer-to-the-money, since that will allow us to capture the “juice” of implied volatilities now in the mid-40s. Accordingly, for each hundred shares of stock you own, short a February 29 call (UMUAK) at-the-market when AKAM gets within 10 cents of the target. A price of about 0.95 would be a pretty decent sale, but don’t try to squeeze another nickel out of this gambit if there’s a chance it will cause you to miss the trade. At the same time, buy one Feb 24 put (UMUNZ) for around 0.50.
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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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Gloom and Doom, British-Style
by Rick Ackerman on January 6, 2010 3:47 am GMT · 9 comments
Explaining why the rampaging bear rally of 2009 is likely to fizzle this year, British journalist Ambrose Evans-Pritchard packs quite an analytical wallop into this sentence: “The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe.” There are other yellow flags out as well, » Read the full article