February 2010

There's a not very inspiring rally target at 15.620  that is roughly analogous to the one proffered today in gold, but I wouldn' recommend trying to get short there.  If the futures should break loose for unexpected yardage, they could get to as high as 16.055  before encountering the next Hidden Pivot resistance.

The 1091.60 rally target has been slow in coming, but we'll stick with it for now because it's pretty and it's all we've got. This Hidden Pivot sits in the middle of a void, so it can be shorted with a stop-loss as tight as 0.50 points.  Looking at a bigger picture, a 1014.20  downside target is still viable and will remain so unless 1166.70 is exceeded to the upside.

The crucial buying power of shorts was mostly spent by mid-session, leaving the futures to fend for themselves. They gave up relatively little ground thereafter, though, presumably because reality tends to lag wilding sprees such as yesterday's by an exasperating day or two.  There is probably enough uncertainty and confusion in the E-Minis' price action to make nearly any camouflage pattern work, but I'll leave the discovery and exploitation of such opportunities up to you. The question of up or down today looks like a coin toss to me.

The terms of Germany’s proposed bailout of Greece were sketchy at press time, but you can bet that the sums involved will not be covered with hard cash.  Rather, it is “financial guarantees” that will be used to shore up Greece’s finances, much the way the more nebulous “guarantees” of the U.S. Government have come to buttress practically every piece of worthless paper held by an American bank. Not surprisingly, the EU bureaucrats are spinning this fraud exactly the way Tim Geithner would have: "As long as it is very clear that any support only comes with very, very stringent conditions attached, it would not affect the moral-hazard question," said Fabian Zuleeg, chief economist at the European Policy Centre, a Brussels think-tank.  Before Mr. Zuleeg came along, we might have thought it was only Mr. Obama’s economic spinmeisters who took their audience for imbeciles. Stock markets around the world rallied ebulliently on Tuesday, even as a credulous press rolled out a story with only vague concerns about how the bailout of Greece would be perceived by such other potential wards of Brussels as Spain and Portugal, as well as by Eastern bloc nations that were forced to beg from the IMF when their backs were up against the wall last year. But if such questions worried global investors, they didn’t show it.  In fact, they greeted the news the same way they do whenever some new, trillion-dollar claim is piled on the dollar – i.e., they bought euros hand-over-fist, treating the currency as though it were good as gold. Germany’s Burden The rescue package is being sold as an EU effort, but in reality it is almost entirely Germany’s burden, since Germany is the only member of the EU that is perceived as able to write a very large check that

Someone in the chat room mentioned rumors of a Microsoft takeover of this stock, and although this sounds completely bogus, I thought I'd take a look at RIMM nevertheless.  On the bigger intraday charts, it looks to be struggling to hurdle a midpoint resistance at 67.55 that was ten weeks in coming.  If the pivot gives way, the breach would become decisive on a two-day close above that number. The minimum upside target would then be 74.70, so calendar spreading the 75 strike is the way to go. For now, bid 2.40 for four June 75-March 75 call spreads, contingent on the stock trading 66.40 or higher. I would prefer to leg into this spread, buying the March calls first on a drop in the underlying stock. At the moment, however, RIMM looks too feisty to oblige. Please let me know in the chat room if you fill the order, since I can establish a tracking position for your further guidance. _______ UPDATE:  Cancel the order. The stock is running away to the upside, leaving our niggardly bid in the dust. Next stop:  71.79.

Since topping Friday just a hair below an important Hidden Pivot target at 80.78, the Dollar Index has created a single bearish impulse leg on the intraday charts. It has yet to play out, but the implied target is 80.03. An easy breach of the support would imply still lower prices, but it would only take slippage to 79.96 to refresh the downtrend on the 15-minute chart.

Silver's intraday charts are exhibiting the same faint-heartedness as gold's, retreating into a dither  after the failure of Monday's rally to top any distinctive peaks in the lesser time frames.  It also turned a minor Hidden Pivot support at 15.020 into suet, suggesting the selling is not done. That would imply more slippage to 14.435 over the near-term, or perhaps to 14.085 if it gives way. Both targets come from obvious patterns on the 180-minute chart. Alternatively, a show of strength today could hit 15.535.

As we found in the E-Mini S&P, all signs point lower.  The 1037.90 target I'd employ for bottom-fishing seems out of range for today, but we should use it nonetheless as a minimum downside objective for the next 2-3 days.  It's not a healthy sign that my second choice, 1052.80, got pasted on Friday.  Enjoy a rally if it comes, but get your guard up if it approaches 1081.90.  That's a Hidden Pivot support turned into resistance by last week's minicrash, and it would be a great place for DaBoyz to spring a bull trap. Pivoteers can find it on the 180-minute chart, where A=1163.40 on January 11. _______  UPDATE (8:59 a.m. EST):  Who are we to complain if index futures are leading Gold around by the nose?  The April contract now looks bound for at least 1091.60 (subject to the caveat mentioned above), a midpoint resistance at 1076.70 having become nominal support.

The futures came within a hair of a resistance peak recorded last Thursday before chickening out yesterday (see chart). This was a less-than-subtle foreshadowing of the 15-point selloff that followed. If it were a gold chart, I'd suggest watching the 5-minute bars for the very first sign of a bullish turn. But this is a stock index, and I feel no compulsion to give it the benefit of the doubt, at least not now. Buyers are showing no enthusiasm whatsoever, and shorts seem more difficult than usual to spook. My minimum downside objective for the moment is 1039.75, a Hidden Pivot support that is better used as a bearish objective than as a place to bottom-fish.  It can be fished  nonetheless, stop 1038.75. ________ UPDATE (8:51 a.m. EST):  Apparently unembarrassed by the yellow stripe we'd painted on their back, DaBoyz have squeezed the futures sufficiently, probably, to give shorts palpitations on the opening. I'd like to see a print at 1092.00 today, however, before we lend our begrudging respect to their characteristically unseemly, and presumably doomed, enterprise.  That  would turn the hourly chart moderately bullish, though no moreso. (Moreso would require at least 1103.75.)