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COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
Rally patterns on both the daily and hourly charts yield some potential opportunities to get short with relatively little risk. Most immediately, there’s a midpoint resistance on the hourly at 118^06.5 that can be shorted via a 118^05.5 offer, stop 118^07.5. Above it, perhaps more speculatively, you could short either 118^19.5 or 118^24 with a stop-loss sized to your taste and cognizant of important prior highs on the daily chart. Upside breakouts in either case could lead to volatile action. The highest target immediately available lies at 119^31, but it is not in play just yet. Pivoteers may be interested in the coordinates used to calculate the targets and midpoints given above. For the daily chart: A 115^18 // B 118^09 // C 117^08 // P 118^19.5 // D 119^31; and for the hourly: A 117^11 // B 118^14 // C 117^21 // P 118^06.5 // D 118^24. _______ UPDATE: The futures headed lower out of the gate, negating our plan.
The daily chart is persuasively bearish, having tripped a conventional short entry on Friday at 1.1028. Moreover, and adding to a picture of short-term weakness, is the fact that no rally since then has exceeded any prior peaks even on the lowly 5-minute chart. So how do we get short with the least amount of risk? My suggestion would be to wait until the futures break below the 1.1031 midpoint support shown in the chart. Thereafter, you should look on the 1- and 3-minute charts either for entry with-the-trend at Lindsay’s point ‘X’; or at the ‘p’ midpoint or ‘d’ target of a minor retracement rally. I’ve sketched the first idea in the accompanying chart. ______ UPDATE (10:15 a.m. EST): The chart foretold this morning’s price action almost exactly, and the hypothetical trade illustrated would have been a solid winner. The CME shows a plunge moments ago to 1.0968 that could be a misprint, but in any event, the futures appeared to have traded down to at least 1.0995 after tripping a short-entry signal at 1.1021. (3-min chart, A=1.1041, B=1.1005, and C=1.1030).
Around 11:30 p.m. EST, the futures were breaking down below the 1112.80 midpoint shown in the chart. This suggests more slippage to as low as 1110.10, its ’D' sibling. Night owls can try bottom-fishing at the lower support, stop 1109.20. Be frugal if the expected rally from our target gives you the chance to substitute a trailing stop for the initial one, since it could be a painful drop if sellers take out the obvious supports.
Because the futures seem to be having little difficulty impulsing on the daily chart with each new thrust, savaging midpoint resistance points along the way, we should assume that an 81.20 rally target on the daily chart will soon be achieved. The move would be subject to resistance at 80.46, the ‘D’ target of a lesser pattern; and on a feint lower, to speculatively buyable support near 78.97, the midpoint of the larger pattern. _______ UPDATE: The futures finished moderately higher after bottoming below our support overnight.
AKAM’s sharp rally has put our goal of shorting February 21 puts for 0.35 out of reach, so cancel the order for now. We continue to hold a round lot with a cost basis of 11.01, offset slightly by a February 24 put acquired for 0.35, and a February 29 call shorted for 0.60.
Yesterday’s rally was NOT impulsive on the hourly chart, having turned chicken-hearted just shy of a one-off peak at 1101.75 recorded last Thursday. It may seem paradoxical to infer that the futures are demonstrating their weakness with each new upthrust, but that’s the way it looks to me. My recommendation is to short this chazzerai each and every time you get a chance, using micro-tight stops above the respective ‘p’ midpoints and ‘d’ rally targets.
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This Just In... for Wednesday
From our Calgary friend Glenn Hermanson, a cautionary note concerning the heavy dilution of mining penny stocks:
“I just got back from my yearly trip to Vancouver to attend junior mining conferences and presentations, and the one thing that really stuck out was the amount of financing that occurred at sub 10-cent levels. Billions of shares were issued in Q4 and Q4 2009 to keep companies afloat and move their projects along. A lot of this paper will begin to trade freely in the next six to eight weeks. I have one junior that has 143 million shares coming off escrow, with free trading to begin next week (float is 332 mm shares) of shares financed at 0.28 cents CDN$. The stock is 0.65$. There are hundreds of these situations right now. For people who do not trade juniors often, this set-up and the potential sell-off could turn into a real “learning’ experience.” I saw John Kaiser speak at a workshop on Jan 18 on this topic and the magnitude of this issue is much larger than I have ever seen before. Just thought you might be interested. Best regards, Glenn Hermanson Calgary.”
Hidden Pivot Webinar & Tutorials
The next Hidden Pivot Webinar will be held on 6/30 - 7/1. This two-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. For more information, or to register, click here.
So Far, a Rally to Nowhere…
by Rick Ackerman on February 3, 2010 4:37 am GMT · 2 comments
Yesterday’s rally on Wall Street added a few extra ounces of credibility to a buying binge that we’d initially regarded as mere noise in a newly re-energized bear market. That could still prove to be the case, although we are close to giving bulls the benefit of the doubt for the moment. The hourly chart below shows why. Tuesday’s binge began with a leap at the opening bell, and buyers never looked back. The result was a thrust that surpassed four prior peaks without pausing for breath. Since we require merely a two-peak breakout on the hourly chart to signal a potentially meaningful trend change, we might infer that this » Read the full article