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COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
The decline of the last two weeks is a less ferocious version of what we saw at the start of this year, so let’s not jump to conclusions about what might evolve, since we know how things turned out the first time. Still, yesterday’s steep drop did generate a bearish impulse leg on the daily chart, and there will be no harm in treating it as though it is the resumption of the Mother of All Bear Markets. If so, the selling is off to a good start, having exceeded the worst-case target that could have been derived from the daily chart, 1168.00. The actual low was 1164.25, and that’s enough of an overshoot for us to presume that more selling awaits. If the weakness does continue — even for just another day or two — it will put the futures in a hole from which the stairstep resistance of prior highs and lows will challenge bulls’ resolve in ways in which it has not been challenged in quite some time. In the meantime, the futures will be best traded from the short side using the five-minute chart or less. Specifically, you should look for camouflage early on in reversals of minor rallies.
Yesterday’s pullback to within three ticks of a Hidden Pivot midpoint I’d flagged at 1166.60 validates a bullish pattern with a 1208.90 target best viewed on the weekly chart (A=1086.10 on March 26). The target will remain valid as long as the futures fall no lower than 1124.30 (aka point ‘C’), but encouragement in the meantime would come from bearish abc corrections that fail to reach their ‘d’ targets. The first such correction was still in progress when the regular session ended yesterday, but I’ll update this advisory intraday as useful clues develop. Most immediately, on the 5-minute chart there is an enticing bottom-fishing possibility at 1157.80. Since the bounce from its sibling midpoint was just two ticks from exact, you could use a stop-loss just 4-5 ticks beneath an 1157.80 bid. _______ UPDATE (10:52 a.m. EDT): Gold’s fright-wig swoon was meaningless technically, although it did stop us out for a small loss before bottoming at 1156.20. The fact that the futures went $10 below the midpoint support/resistance is no reason for anxiety. They are “entitled” to do so because the initial thrust above the midpoint exceeded it by a whopping $26. Bulls still have the edge here, and significantly.
Don’t look for a quick recovery and blitzkrieg rally to the 21.53 target broached here earlier, since the futures have fallen without refreshing the bullish impulse on the daily chart. That would have required a push to 18.915; in actuality, the most recent thrust topped at 18.890 on Monday. The negative implications thereof would be affirmed by a further fall exceeding 17.260, so we are not quite there yet. However, the larger picture, with its 21.53 rally target, will remain viable as long as July Silver does not fall below 16.590.
Propped by nervous shorts who evidently lack not only confidence but perhaps competence, Goldman held like the proverbial rock yesterday. Too bad most of those who have remained short will not make it to the promised land — a 135.35 Hidden Pivot support broached here earlier. That might not be the worst case, either, since there’s another equally important Hidden Pivot support at 124.79. It could be over for Goldman, since, as a result of the civil fraud action brought against the firm by the government – and possible criminal charges to come – they will remain eminently sue-able till the cows come home.
Abbott Labs shares bounced just above a midpoint pivot on Tuesday, making the sibling “D” target look like a buy if we get the chance. ABT finished a respectable bullish impulse wave on January 20 and has been trending fitfully lower since then, appearing on the weekly chart to be probing for a “C” point. On the daily chart we see a bearish pattern whose midpoint at 49.67 turned the stock back upward just yesterday. If the decline resumes, however, traders should buy the “D” target of 47.75 with a bid at 47.80 and a stop at 47.69. (Posted by Doug McLagan) _______ UPDATE (May 6, 03:54 p.m. EDT): The reported low of the day for ABT is different depending on the source, but the chart makes a sub-$46 low look like a data error. Other than a single one-minute bar, the chart has not quite reached a low of 48.00. But due to the confusion and to the wild trading conditions, we will cancel this recommendation.
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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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Cheap-o Greek Bailout Is Not Calming Markets
by Rick Ackerman on May 5, 2010 12:20 am GMT · 12 comments
Bruised and bloodied bears must have felt a rare sense of exhilaration yesterday as trading on the NYSE drew to a close. That, and a twinge of anxiety about whether U.S. stocks could actually fall for two days running. Some traders evidently decided not to bet on it, and so short-covering drove the best rally of the day in the final half-hour. After all, who would have had the guts to take a short position overnight in a market that has been on a wilding spree for 14 months? Some short-covering is bound to occur at the tail end of any day on which the Dow has fallen more than 200 points, as it did yesterday. But the fact there wasn’t more of it, and that the lows penetrated some key supports identified in yesterday’s commentary, suggests there is more selling to come. Bear in mind that Tuesday is a » Read the full article