June 2010

Yesterday's installment of the daily comedy played out just as predicted during the impromptu webinar -- i.e., with the E-Mini S&Ps hitting a short-able Hidden Pivot in the final minutes of the session. I'd suggested a three-tick stop-loss for an 1110.50 short, but those of you who had the guts and good sense to stand pat against the actual high at 1111.50 will have only pleasant choices to make Tuesday night. The futures  have sold off to 1106.75 so far, so taking a partial profit would be wise. For those of you who simply bought DIA puts as I'd suggested, I'll track four July 96 puts @ 0.70. I won't hazard any predictions for today, since the futures did all that I could have predicted for them yesterday. ______ UPDATE (3:49 p.m. EDT):  The dike has held -- for now.  The futures spent the entire day lapping at an alternative Hidden Pivot target at 1115.25 that I'd furnished in today's DIA tout and in the chat room, never getting any higher than 1114.75.  Like the Terminator, however, short-covering bears will be back tonight/Thursday -- and nervous -- unless there's exceedingly bad news overnight.

Another 200-point rally in the Dow, and it’s hard to say exactly what has put Wall Street in such a giddy mood. Talk about climbing a wall of worry!   Is it perhaps the increasingly shrill warnings of an oil-induced Armageddon that have sparked a binge of contrarian buying?  Or maybe it's the gap that has begun to open up between a Europe hell-bent on “austerity” and a stimulus-addicted America about to launch yet another $50 billion jobs package?  The money managers who have been recklessly pouring O.P.M. (Other People’s Money) into stocks lately must think the dollar weakness that a tight-fisted Europe will inevitably bring about is going to boost U.S. exports -- what exports? -- and bring back prosperity. But wait, here’s another possibility:  Because Wall Street hates uncertainty more than anything else, perhaps investors are comforted by the growing certainty that our President is so utterly lacking in competence as to all but ensure a landslide victory for the Republicans in the November?  Another factor that could account for the rally is the afterglow of some recent economic data suggesting that housing, jobs and retail sales are all tanking simultaneously following a $13 trillion attempt to get the economy moving. Great!  Now the Fed can finally get serious about lowering rates below zero so that borrowers will literally get paid for doing what already comes naturally. Or so investors must think. Considering the foregoing, we needn’t have wondered why the bulls are so jazzed. In fact, their all-but-insatiable lust for shares these days only proves once again that on Wall Street, too much of a bad thing is never enough. Our Bearish Hunch For our part, we’ve been laying in a modest inventory of put options on the Diamonds as stocks have moved higher. The strategy is highly speculative, since it’s

It's shortly after 9 p.m. EDT, and the E-Mini S&Ps have rolled over, creating that rarest of sights:  a downtrend during the night session.  I don't know whether DaBoyz may have perhaps heard trumpets sounding from on high, but the fact that the S&Ps are trading just a tick or two above the daytime close suggests there's real fear in the air. _______ UPDATE (10:08 a.m. EDT):  N-a-a-a-h!!

Silver has been in a holding pattern for two months, so let's not begin the day expecting too terribly much. A print at 18.815 is what we should want to see before we take serious encouragement, since that would exceed a look-to-the-left peak on the hourly chart that was made May 19 on the way down.   If you'd prefer to be on a hair trigger, and perhaps to get long using camouflage, the impulsive breakout on the 3-minute chart would come at 18.335.

A 15-point rally today that touches 1237.00 is where the action would start to look encouraging for bulls. However, as noted in an earlier post, it will take a close above 1237.40 to set the futures on a course to at least 1258.60 -- or perhaps 1272.60 -- over the near term. If they head lower, the 1207.00 target flagged here earlier is still valid and can be bottom-fished with a stop-loss as tight as a point.

It's been a while since we pondered this limping lump of brick dust, but it's not a happy sign for bulls that the stock has slipped so easily beneath the Hidden Pivot support shown in the chart.  What it suggests is that Goldman will fall anew, this time to Hidden Pivot support at 122.25. Camouflage shorts are encouraged from these levels, but if you've got the patience to wait, bottom-fishing at 122.25 could provide the kind of low-risk opportunity that we thrive on.

Crude has been rallying for the last week into the weight of a powerful downtrend that became manifest on the weekly chart in late May.  The rally projects to 78.08, but we shouldn't be surprised if it sputters out somewhere beneath that Hidden Pivot.  I'd suggest trading it from the long side nonetheless, although the action was too squirrelly Monday to leave much in the way of handholds for night owls.

Bears who are primed to panic on the next 100-point rally should take a look at the Dow's weekly chart before they jump: heavy, heavy, heavy!   It's difficult to predict how high, or even whether, DaBoyz will be able to squeeze the blue chip average this week, but we'll be watching vigilantly each day for opportunities to get short. Assuming yesterday's low at 10186 is not taken out first, a midpoint resistance at 10286 shows promise.  If it gives way, however, buyers would be telegraphing more upside to as high as 10387.

Investors enamored of gold now have two supposed contrary indicators to worry about:  the New York Times, which did a front-page feature over the weekend on bullion’s growing popularity as an asset class; and CNBC, where a Deutsche Bank analysts on Friday predicted a $75 surge to $1300 an ounce over the next few days.  Although we've never been comfortable following recommendations aired on CNBC, the ostensible endorsement of the Gray Lady is another story. Our respect for the Times’ business section goes back to the summer of 1976, when they were the first big newspaper to notice that a small company called Resorts International had opened an office in Atlantic City.  Resorts’ common shares were selling for about $2 at the time, but – gold bugs take note – after the Times story ran in August, RTA class ‘B’ shares began a steady ascent over the next two years to around $160. So don’t think that just because gold investments have gotten front-page treatment in the New York Times that that will be the kiss of death for precious metals. The Times, after all, is not merely some upscale cousin of the mentally retarded Newsweek. And for every half-competent, politically warped bloviator like Paul Krugman who writes for the paper, there is a top-flight reporter elsewhere in the newsroom like Floyd Norris, who gets his facts straight and covers the issues of the day with the kind of balance and understanding that can truly help readers get a handle on the news. Gold Will Take No Prisoners Contrary indicators aside, our own technical runes suggest that gold’s long-term bull market remains healthy and robust but that deep-pocketed buyers are in no particular hurry to push quotes up to new levels.  Under the circumstances, we’d be surprised if the CNBC guest's