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COMMENTARY for Sunday
TODAY'S ACTION for Monday
Rick's Picks for Monday
The futures have lurched back to pseudo-life early Sunday evening but have offered little evidence otherwise concerning their intentions. A 1043.75 Hidden Pivot target is one of several vague downside possibilities, and although its sibling midpoint support at 1073.50 did not provide a precise confirmation, the midpoint has been sufficiently brutalized that we can infer lower prices are at least somewhat more likely than higher. Alternatively, the futures would need to rally to 1112.00 by Wednesday to turn the hourly chart unambiguously bullish, but it would require only 1077.75 today to accomplish that on the five-minute chart.
It would take a rally today exceeding 1105.70 to jolt the futures from their dirge. Although the downtrend turned mellow ten days ago, it is a downtrend nonetheless, and no rally since then has been able to puncture the two prior peaks we require on the hourly chart to signal a meaningful trend change. From a too -abundant selection of downside possibilities available to us at the moment, I discern only one, at 1062.50, that looks like it could be worth bottom-fishing. A stop-loss at 1061.75 is recommended. _______ UPDATE (1:40 p.m. EST): Today’s rally is robustly impulsive on the hourly chart and likely to provide buoyancy in the day’s ahead. There has been no correction so far on the hourly, and the futures will therefore have a chance to double the power of the rally via the small push it would require to surpass two more external peaks, the higher of which lies at 1118.50.
Silver’s hourly chart offers more clarity than Gold’s right now, and I’ve settled on a pattern with three single-bar coordinates to produce a 15.360 correction target. The midpoint support at 16.160 associated with that number has already been trounced, yielding a negative bias for the near term. The bearish outlook would be decisively negated via a pop above 16.785 today, but we can use a far subtler signal at 16.465 on the three-minute chart to tell us more speculatively when this may have occurred. _______ UPDATE (1:45 p.m. EST): Silver is frisky today, but it lags gold and has not yet impulsed on the hourly chart. That would require a minimum 16.760 (versus a so-far high at 16.680), but we’ll raise the bar somewhat and stipulate that 16.970 be reached by Tuesday’s close to keep the good times rolling.
The last, minor correction cycle overshot its Hidden Pivot midpoint, so we should look to short this rally if and when it reaches its ‘D’ target at 120^02. A stop-loss no wider than four ticks is all I’d allow, and I’d suggest initiating the trade only if there’s an hour or more remaining in the session. _______ UPDATE: Cancel the order, since weakness prevails for now.
The short I advised from 27.15 has proven timely, since it helped us protect our gains from within 13 cents of a peak that marked the beginning of a so-far 10% correction. At the top, we purchased a February 24 put for 0.35 and shorted a February 29 call for 0.60. For each round lot of stock still held (with a cost basis of 11.01!), I’d further advised offering a February 21 put (UMUNT) short for 0.35, good through last Friday. Let’s extend the order for another week, since AKAM’s selloff is steepening so that we now have a good chance of being filled. My downside target is 23.89, and I’ll recommend six cents above it for 100 shares, no stop-loss, regardless of whether the put order fills.
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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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Time for Inflationists to Put Up or Shut Up
by Rick Ackerman on January 31, 2010 9:21 pm GMT · 49 comments
As “dead” money continues to pile up in the form of unborrowed bank reserves, we’ve grown increasingly skeptical about the possibility of an inflationary spiral. Hyperinflation seems inevitable somewhere down the road, but what about now, as real estate deflation continues to asphyxiate the U.S. economy? To all who have continued to insist that the Fed would not “allow” a deflation to occur, we say once again: Look around you. Even those two intractable engines of inflation – college tuition and health care – appear, finally, to be slowing down. Moreover, an even more powerful source of inflation — government spending – has begun to decelerate with the lethal speed of a crash dummy. Yes, the party » Read the full article