Wednesday, May 26, 2010

I'm not buying any of this -- literally -- since it is coming off a 133.81 low that lies almost $2 beneath  the lowest low I could have projected using the hourly chart. That suggests sellers will soon resume control, even if it  would only take a print today at 144.31 to temporarily cede the advantage to the madmen.  Incidentally, a pullback from just above 144.31 could provide camouflage for traders who want to jump on the stock for a presumptive short ride north.

Early Thursday night, the futures appeared to be mustering the energy to take on not only the 18.165 peak we benchmarked here yesterday, but a second more daunting one at 18.330. The latter lies 20 cents above this evening's so-far high, and 13 cents above a minor HP at 18.200, so buyers will have their work cut out for them. A close above 18.330 would portend easy progress to at least 18.795, the Hidden Pivot midpoint of the large pattern shown in the chart.  I have used the lowest possible point 'A' in this instance to project a target because all of the jiggle-jaggle that followed it did not surpass the first "external" peak at 17.895.

The rally sputtered out a tad shy of a Hidden Pivot target at 1209.40, but expect it to get there today -- or possibly to  1213.60 if any higher -- before buyers run out of steam for perhaps a short while. Both targets are shown in the chart, and both are clear and compelling, so a push past them should be treated as good news for bulls.

Despite yesterday's hyperdrive recovery off a 1036.75 low, I'll stick with the 1022.75 target given here earlier.  It may be a while in coming, since shorts will have been spooked pretty badly by the hysterical buying in the final hour, but I do believe it will come nonetheless.  In the meantime, there are two external peaks on the daily chart by which we might gauge the persistence of any mania that develops. The first lies at 1088.75 and is easily within reach, but the second, at 1147.50, will be much more challenging.  The 1022.75 target will remain valid in any case, so long as 1174.75 (aka point 'C') is not exceeded to the upside.

We are revisiting Lean Hog futures because we put out an informal, long-term short a while back in conjunction with a new service that may be offered by Rick's Picks in the future. For now, though, let us note that the  downtrend from late April's highs looks like it will reach a minimum 78.400, or perhaps 77.100 if any lower, before bulls get much traction.

How far can this short squeeze go, right?  Many of those who bought into it may feel chastened when the markets spring to ostensible life Wednesday morning, so don't expect the hysteria to work wonders for a second straight day.  Fortunately, we can use an objective benchmark to tell us if things are getting out of hand:  last Thursday's 10272 peak.  Any progress above it today would need to be taken seriously, even by those of us who have to stifle a laugh every time stocks leap the Wall of Worry in a single badly misconceived bound.

Now wasn’t that refreshing!  The Dow did a nearly 300-point dipsy-doodle yesterday, providing comic relief for millions of investors who might otherwise have spent the day fretting over the oil spill and North Korea’s quasi-declaration of war.  Earlier in the day, before NYSE stocks staged an epic recovery from abysmal lows, both of these developing news stories were cited by pundits as reasons why the broad averages had plummeted on the opening bell. How silly of us to think that Wall Street might actually have been concerned about Kim Jong-il’s next move, or about the mounting catastrophe that threatens to destroy the Gulf of Mexico’s ecosystem and shore-based economy, if not the economy of the entire U.S. Perhaps when globs of tar start washing up in the Hamptons, and the livelihoods of fisherman from Maine to Galveston are threatened, perhaps then stock-market speculators will act for once like they have a stake in the real world. In the meantime, it’s hard to tell which is more threatening:  a nuclear-armed, certified whack-job spoiling for a fight with his neighbor to the south, or an oil gusher that could turn most of America’s coastline hostile to humans and deadly to waterfowl and marine life.  We supposed we’d rather take our chances with Kim Jong-Il, since there’s always the remote possibility he’ll wind up like Mussolini and those lovely Ceausescus. But the oil-spill story seems to be getting worse by the hour, and it has the potential to replace “American Idol” as bozo-dom’s number one obsession if British Petroleum’s attempt to plug the leak with a “top kill” fails.  Failure was evidently a risk, since the oil may be gushing too hard for the tactic to work, according to some engineers. There were also rumors that the sea bed had collapsed and that