Crude looks bound for 76.13, a Hidden Pivot target that can be shorted with a stop-loss risking no more than 3-4 ticks. The gnarly pattern associated with this target looks like a winner to me, and that’s why I think we can get away with a stop-loss much tighter than the 21 (or so) cents this vehicle usually requires. If you are looking to catch a ride north, watch for camouflage opportunities on a pullback to around 74.36, the midpoint pivot associated with the rally target. _______ UPDATE: 75.69 is as high as the futures got on the last run-up. The target is still valid, though not quite as appealing, so I’ll recommend canceling the order.
From the monthly archives:
February 2010
Bid 0.05 for a February 27 call to neutralize the risk of the February 29 call that we shorted a while back for 0.60. We also hold a round lot of stock for 11.01 and a March 24 put acquired for 0.65. No further action is required. ______ UPDATE: We bought the call for 0.05, the low of the day, when it traded at that price on the opening. Imputing the 0.55-cent gain to the cost of the put we still hold lowers its cost basis to 0.10. We also now have a vertical call spread, Feb 27- Feb 29, – that amounts to a free lottery ticket with a $200 prize if Akamai should soar between now and February 19. _______ FURTHER UPDATE: The spread went out worthless, and so we now hold a round lot of stock with an imputed cost basis of 11.11.
If the futures are unable to slither above Tuesday’s 1077.00 high — a coin-toss bet, as far as I can tell – look for a selloff to at least 1048.25, a midpoint support that can be bought with a stop-loss as tight as 1.00 point. A close below it would hint of more weakness over the near term to as low as 1019.50, a Hidden Pivot. Alternatively, an upthrust can be expected to reach 1080.25 before buyers are seriously challenged. _______ UPDATE (3:40 p.m. EST): With 20 minutes left in the session, the futures have gotten as high as 1078.00, leaving just a little bit more upside relative to our 1080.25 target. If it gives way easily, that would telegraph more strength to a least 1092.50.
With whacky swings intraday, the futures have so far resisted the magnetic pull of a 1014.20 downside target given here earlier. They could shoot up to 1085.10 today, or even as high as 1102.40, if this condition persists. However, if sellers return in force, the first place we could try bottom-fishing aggressively would be 1042.80, the Hidden Pivot midpoint of the pattern shown in the chart. _______ UPDATE (1:22 a.m. EST): Although the dollar was getting whacked early Thursday morning, Gold was not reciprocating. Bullion seems likely to win this showdown, but it is evidently going to take more than the 0.32-point drop that has occurred so far tonight in the Dollar Index (DXY) to stoke the requisite buying. ______ FURTHER UPDATE (3:06 p.m. EST): 1102.40, here we come! This Hidden Pivot target was not proffered as a great place to get short, but rather as a bullish price objective to buck up anyone thinking about getting long on the way up. The pattern itself is a rule-breaker, as I’ve tried to make clear, and the target is therefore not a high-odds place to jump in the way.
The latest report from Auerbach Grayson suggests that the global correction has further to go and that current weakness should not be viewed as a buying opportunity. We offer the report courtesy, which was prepared by Richard Ross, with gratitude to our friend and longtime subscriber Jonathan Auerbach. Click here for a copy.
In an essay published by Mises Institute, economist Frank Shostak, whose work has been featured here many times, debunks the fiction that last quarter’s 5.7% GDP growth was a harbinger of recovery. In fact, it is savings and investment we should be measuring if we want to predict the strength of a recovery. GDP statistics, says Shostak, tend to overvalue the kind of Keynesian-type stimulus that ultimately destroys wealth. Here’s an excerpt:
“Once the central bank raises the pace of money expansion in order to lift the economy out of a recession, it prevents the demise of various false activities. It also gives rise to new false activities. The outcome of such so-called economic growth is nothing more than the strengthening of wealth consumers and renewed pressure on wealth generators. All this undermines the process of wealth generation and weakens true economic growth.”
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We’ve been playing patticake with a single March 44 put that we hold with a cost basis of 0.23. Let’s get more aggressive with some scale-in buying of April 42 puts. Bid 1.11 for two and 1.03 for five more, good through Thursday. You should also cancel the g-t-c order to short a March 39 put against the put we own. _______ UPDATE: We bought the puts as planned and now hold seven of them for an average 1.05, plus the March 44 put. Nothing further is advised for now.
A Cautious Bernanke Finally Gets It Right
by Rick Ackerman on February 11, 2010 2:48 am GMT · 27 comments
The stock market often swings wildly on insignificant news, but yesterday Wall Street appears finally to have taken some real news in stride, flatlining in response to one of the most delicately and judiciously worded speeches we’ve heard from Mr. Bernanke since he took office. The Fed chairman was addressing perhaps the most crucial economic topic of them all — namely, how the Fed plans to wean the financial system off easy credit in the wake of the most spectacular monetary blowout in U.S. history. Turns out, he does have a plan. And although we have rarely given Mr. Bernanke a passing grade for anything he » Read the full article