Tuesday, May 11, 2010

For the record, the nimble trader could have bought May 260 calls for 0.50 when stocks were bottoming last Thursday.  They traded for 4.50 yesterday, when profit-taking probably acted as a restraint on Apple's further progress. The stock's pullback was so shallow that anyone still short should have been alarmed by day's end.  A rally to 266.32 is indicated, with a possible midpoint impediment at 257.43.

Silver curiously held its ground yesterday against mild weakness in Gold, setting up a possible thrust to as high as 19.430 over the near-term. First, though, buyers will need to push the June contract past  hidden resistance at 18.825, the midpoint sibling of our target. A 50-cent pullback would not only do no harm to the bullish technical picture, it would help rest the futures for a run-up above last week's moderately challenging highs.

Friday's 1214.90 peak will have double stopping power because of a midpoint Hidden Pivot resistance not far below it at 1213.75.  A close above the latter number would signal that the futures are ready to take a leg up to 1243.10. There were no glowing opportunities to get long early Monday evening, although  the  1193.70 midpoint shown in the chart would be worth bottom-fishing if the opportunity should arise. It would of course be preempted if the futures rally first above the 1204.80 high I've used for a point 'C'. _______ UPDATE (1:22 a.m. EDT): A gentle rally surpassed 1204.80 overnight, negating the opportunity.

Friday's wilding spree didn't quite reach the nakedly ambitious target at 1170.75 that I'd said would max out the move, so it's still valid.  Above it is a new target at 1205.25 that came into focus as a result of yesterday's price action.  It is tied to an 1174.75 midpoint that hasn't much trading value, since it coincides with some important highs recorded last Wednesday.  Night owls should look for a possible buying opportunity on a pullback to 1151.50, a minor midpoint support that comes from the hourly chart (A=1159.50). _______ UPDATE (1:15 a.m. EDT):  The futures are in screw-the-pooch mode tonight, having dipped as low as 1148.50. It looks like it's going to be a long night.

At last, the European Union has decided to do a USA-style bailout – one with a quintessentially American, trillion dollar price tag and a shining vision of success.  “[The agreement] will ensure that any attempt to weaken the stability of the euro will fail,” said European Commission President Jose Manuel Barroso.  Yeah, but for how long?  We wonder if Mr. Barroso noticed that the euro finished on a downswing yesterday (see chart below), even as the ink on this latest deal was drying. Still, we hate to rain on the EU’s parade, and even if the Mother of All Eurobailouts failed to inspire a show of confidence in the euro, it nonetheless did pump up the world’s stock exchanges with  trillions of dollars’ worth of dubious new valuations. European shares registered their biggest single-day gain in a year-and-a-half, and U.S. stocks were not far behind. This bailout is a far cry from the paltry $60 billion credit line provided to Greece just a couple of weeks ago. We’d noted at the time that trying to do these rescue packages on-the-cheap would only invite doubt and derision. Probably the last thing those humorless stiffs in Brussels want is derision, and so no one should have been surprised to see them throw caution to the wind by ponying up a proper sum for a pan-European rescue. Greece will now be less likely to get kicked, punched and insulted when it heads for the discount window, and Spain, Portugal Italy and Ireland won’t have to worry so much that all of the rescue money will gone by the time Greece is done with it. Soup to Nuts It’s hard to say how long the good feelings will last, though, since we know from America’s experience that even a trillion dollars doesn’t go very