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COMMENTARY for Thursday
TODAY'S ACTION for Thursday
Rick's Picks for Thursday
My immediate outlook is bearish, but there’s not much to work with on the hourly chart to predict how bad the next leg down will be. Assuming yesterday’s bounce from within a tick of the featured pivot at 1106.90 is a distribution, it doesn’t looked sufficiently developed yet to engender an equally nasty C-D follow-through. However, since this assumption is all we’ve got at the moment, I’ll go strictly by-the-numbers, using the obvious abc coordinates shown in the chart. They yield a 1090.30 target, subject to a bounce at the 1103.20 midpoint support. Both numbers would be invalidated by a wee rally surpassing the 1116.20 point ‘C’ overnight. Alternatively, and once again, we’ll use 1154.00 as a benchmark to alert us if bulls have sprung back to life.
The pattern shown in the chart leads nowhere no matter how you slice it. That’s two weeks’ worth of paint drying that you see, and far be it from me to guess when something is going to change. A semblance of a rally reappears if you take a few steps back, and it even produces a rally target of sorts: 1163.50, a tad below an earlier target at 1166.00 (same pattern lower point ‘C’). I’d infer the futures are on their way there if they can close above the 1144.50 midpoint for two consecutive days. More immediately, traders can try bottom-fishing at 1129.25, stop 1128.50, provided 1138.25 is not exceeded to the upside first. If the stop-loss is hit, consider it a warning of more slippage to as low as 1120.50. _______ UPDATE (9:17 a.m. EST): A thrust to 1138.25 overnight invalidated the trade as given, although not the downtrend. The futures would now have to pop to 1143.25 for bulls to take charge.
Since I’m feeling no fear whatsoever about the possibility of a stock-market collapse, it’s probably time to buy some speculative puts. So that it is not mere “feelings” that inform this trade, we’ll use a 50% retracement of the decline from Tuesday’s high as a place to get short. The corresponding number is 46.04, so buy two March 44 puts (QQQOR) if and when that number is closely approached. The puts should be trading for around 0.72-0.76 if you want to simply enter a limit bid before the opening.
In after-hours trading, the Dollar Index was creeping up on the 78.69 midpoint resistance flagged here earlier. Its ability to resist the trend should tell us whether we are likely to see a renewed surge to 80.78, its ‘D’ sibling. If today’s settlement is above the midpoint pivot, a move to the higher number over the next 7-10 days would become no worse than an even-money bet.
Apple is struggling to reach a midpoint target at 216.39, but we should continue to use it nonetheless as a minimum upside objective unless 204.10 is exceeded to the downside. If the stock gets past the resistance and closes above it for two second days, we should infer that buyers are capable of pushing AAPL to 228.69,
A bearish pattern analogous to the one I’ve identified in Gold projects to 17.170, a target whose attainment will be subject to a possible midpoint bounce near 17.590. Both numbers will remain viable as long as 18.015 has not been exceeded to the upside.
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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.
This Just In... for Thursday
A link to John Hussman’s lengthy but promising ”Inflation Myth and Reality” came via e-mail at the tail end of this 16-hour work day, but I lacked the energy to imbibe it as bedtime reading. To anyone who is interested, or who wants to get a head start on the discussion, click here to access the essay.
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Lower Lows Coming in Gold
by Rick Ackerman on January 21, 2010 12:55 am GMT · 6 comments
A forecast for Comex Gold sent out to subscribers Monday night came within a dime of nailing the low of yesterday’s $33 plunge. That’s the good news, and some subscribers evidently were able to make hay with the prediction. The bad news is that it looks doubtful that the 1106.80 print that marked the February contract’s intraday low will hold, given the recent strength in the U.S. dollar. You can see how powerful the greenback’s uptrend is in the chart, below, of the NYBOT Dollar Index. Yesterday the index scored its most » Read the full article