On the daily chart, a succession of lows beginning with last July’s 8087 has given us a series of corresponding rally targets all the way up. The next projects a potentially tradable top at 11312.06 (A=92953 on September 3, 2009), although the point ‘A’ low associated with it doesn’t look substantial enough to produce a major top. The maximum high one can project using the same vantage point is 12471.68, a Hidden Pivot that we will want to short aggressively if and when it is achieved. The midpoint pivot associated with that number held up for all of two days, hinting of strong buying power beneath the surface. _______ UPDATE (12:45 p.m. EDT): In the chat room last night and today, “Emerald” homed in on an 11254 target that nailed the so-far high, 11258.01. The pullback has since gone as low as 11222, so partial profit-taking was in order for anyone who shorted the top. My advice in the chat room was to use the Diamonds to get short, but the same advice would apply.
From the monthly archives:
April 2010
I don’t track Copper very closely, and so I missed what could turn out to be an important top recorded two weeks ago. As you can see in the accompanying daily chart, the actual high came within 0.005 points of a quite clear Hidden Pivot target. If Copper were to push above that target within the next week or two, it would imply that there is sufficient buying power to push the futures for yet more weeks, if not months.
Gold rallied sharply on Friday but still fell a smidgen shy of our bullish benchmark. The shortfall is likely to be remedied today, since it will require only a further push of 40 cents to do the trick. Thereafter, you should use 1171.50 as a first line of resistance, then 1192.60 as a minimum objective following a close above 1171.50. Both are Hidden Pivots derived from the hourly chart, where A=either 1123.50 (4/6) or 1102.40 (3/30).
Declining from its sixteen-month high in early April, crude oil has traced out a pattern that aims for a “D” target of 79.43. That objective will remain valid so long as the “C” point at 84.64 is not revisited. Traders with the courage to be short oil should look for a small pattern enabling a low-risk entry. The “D” target is just above a prominent low of 79.27 established a month ago, so the trading in that area is likely to be intense. The dilemma is that the oil market often rallies sharply off of its low points. One possible approach is to buy the pivot itself, 79.43, with a stop at 79.26, one tick below the prior low, for a hypothetical risk of $170 per contract. But we emphasize “hypothetical”, as the stop could be subject to meaningful slippage. (Posted by Doug McLagan) _______ UPDATE (11:45 a.m. EDT): Oil got as far down as 82.92 before rallying through our “C” point and thus cancelling the target.
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Pick of the Day: We’ll try to short a Hidden Pivot rally target today, but using two tactics that I usually do not advise. First, we’ll be using a limit bid of 1.15 to buy two May 111 puts (which closed yesterday at 1.63). Ordinarily, we would buy the options based on the price of the underlying stock. I will also suggest that you not attempt this trade unless the opportunity arises in the final 90 minutes of the session; usually, I avoid trades late in the day. We are breaking the rules for two reasons: 1) with DIA at 111.79, my rally target for today, the options would be fire-sale priced at 1.15; and, 2) our low-ball bid anticipates getting the puts dumped in our lap at the tail end of a late-Friday short-squeeze. (Note: No one should have to pay for Rick’s Picks, and that’s why I offer a Pick of the Day: to make back the cost of your subscription, at the very least, over the course of a year — or a week, or even a day. ) ________ UPDATE (11:01 a.m. EDT): Although the 111.79 target nailed the top of this morning’s spiky rally to within a nickel, the trade was a non-starter for two reasons. First, the target was hit, not in the final 90 minutes as specified, but in the first hour; and second, the bargain-basement option price of 1.15 was based on the time decay that we might have expected toward the end of day on a Friday. In actual fact, the puts traded no lower than 1.30. (Premium values sometimes dive in anticipation of the weekend, especially when the option expires that month ; I ran theoretical values for April 26 to determine how much the puts would be worth using a very conservative estimate.)
The nasty chop of late has not diminished the likelihood of a shortable thrust to 1219.25, although it may have dampened the ardor of traders looking to ride the uptrend, such as it is. As of around 7:40 p.m. EDT, there was little for night owls to do, although a minor downtrend hinted of a potentially tradable bounce from 1199.50, give or take two ticks. _______ UPDATE (2:21 a.m. EDT): As of the moment, this trade is working nicely, since the low so far tonight fell at 1199.25. If you risked two ticks on the initial stop-loss , half the position could have been covered as soon as 1201.00. I’ll assume two contracts were acquired, however, and that only one remains. Use an 1199.00 stop for now, switching to a 2.50-point trailing stop at 1206.25. _______ FURTHER UPDATE: The futures stopped out the initial point ‘C’, making their eventual low at 1197.50 overnight before spiking to a so-far high today of 1210.25. Our position would have recorded a small loss of perhaps 4-5 ticks on the exit (or perhaps no net loss if partial profits were taken early in the trade).
A rally surpassing 18.325 is needed to turn the hourly chart bullish again, but failing that, we should use 17.750 as a bearish benchmark. Yesterday’s downtrend held above that midpoint support, but look for the futures to fall to at least 17.335 (or perhaps even 17.245) if it’s breached. Pivoteers may have noticed that there are several possible peaks we could have used as ‘A’, depending on which time frame is observed. Paying close attention to action at the Hidden Pivot midpoint associated with each is the best way to produce a winner for bottom-fishing at the final ‘D’ low. ______ UPDATE (11:27 a.m. EDT): After a wild end-of-night, the futures reversed sharply to begin the day, exceeding by two cents the 18.210 rally target we might have projected. This is bullish going forward.
A trendline noted in the chat room yesterday by erstwhile cheese farmer ‘Nutcase’ looks magnetic, so we shouldn’t be too surprised if June Gold tests the line before the next rally. With an upward slope of about $7 per day, trendline support will come in around 1115.00 today and 1122.00 on Monday. If the rally occurs without such a test, however, it would still need to get past the 1171.80 resistance noted here earlier to get seriously airborne. More immediately, the futures were in a minor uptrend at day’s end with the potential to reach 1150.50. The move would be subject to midpoint resistance at 1145.60. Alternatively my worst-case number is 1119.90, a Hidden Pivot support that can be bottom-fished with a stop-loss as tight as 80 cents. ______UPDATE (7:15 p.m. EDT): The 1150.50 rally target has been trashed by a nasty downdraft that took out the point ‘C’ low at 1140.70. The nearest support is 1138.30, a Hidden Pivot midpoint. _______ FURTHER UPDATE: Gold got quite a goosing this morning and was up $15 when it peaked at 1157.90. The rally was not sufficient to create a bullish impulse leg on the hourly chart, however — that would have taken a print at 1158.90 — so let’s be pleased but unexcited and leave it at that.
Health Care Poised to Follow the Money
by Rick Ackerman on April 26, 2010 12:01 am GMT · 11 comments
We’ve become used to jobless economic recoveries, since, more than anything else, it is the downsizing of payrolls that has caused corporate profits to rebound from recessionary troughs. In theory, this is part of the “creative destruction” that helps the economy get lean and mean: Workers who have lost their jobs migrate to stronger companies, many learning new job skills to meet the demands of emerging businesses. This time around, however, so many key sectors have downsized, especially finance, retail and real estate, that there are not nearly enough emerging growth sectors to take up the slack.
Which sectors of the economy seem likely to grow the most over the next 5-10 years? Unfortunately, signs point to health care above all, since, if Obamacare takes root, that’s where the lion’s share of new federal spending will be going. We say “unfortunately,” because investors chasing all those new Obamacare dollars will tend » Read the full article