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From the monthly archives:
July 2010
There’s no predicting how high this squeeze will go, although a doubling off June’s $27 low should probably suffice to extinguish whatever temptation may have existed in this world at one time to short the stock. Paradoxically, one cannot help believing that BP shares are destined to fall below $5 — w-a-a-a-y below – if one ponders Matt Simmons’ version of the story. He thinks the riser cap is just a stall tactic and that BP will eventually face tort liability for destroying the Gulf of Mexico and probably much more. Click on the link above and you may even find yourself agreeing with me that, most unfortunately, he still does not sound quite like a whack-job.
Silver’s intraday charts continue to look more encouraging than Gold’s, although it seems likely the latter will drag the former lower rather than both heading higher on Silver’s strength. If there’s a bullish surprise, however, use a midpoint resistance at 18.330 as a bullish “trigger” threshold for a further move to as high as 18.680.
The pattern highlighted in the chart continues to trumpet a target at 1140.10, a by-now familiar Hidden Pivot support that can be bottom-fished aggressively with a stop-loss as tight as you can handle. Traders should be alert for a potentially tradable bounce from 1155.00 as well, since there’s a lesser pattern with a ‘d’ target at that price. That last number should be considered our minimum downside projection for the near term, although the bearish outlook is nothing that a thrust to an old and familiar look-to-the-left peak at 1222.90 wouldn’t cure. _______ UPDATE (2:50 p.m. EDT): Gold plummeted $26 this morning, bottoming at 1156.90. While this came pretty close to out target, it was not quite close enough to trigger a bottom-fishing bid (which you should cancel in any event). The target remains valid, but the so-far feeble bounce lends even more weight to the 1140.10 target.
Yesterday’s metaphysically enfeebled rally was a downpayment on a bigger push to at least 1136.50 that I’ve projected for the week. I’ve reproduced a chart that shows an intraday high that missed its 1112.00 target by a single tick. Was this foretold by the single-bar A-B-C coordinates I’ve highlighted? As far as I’m concerned, you can never go far wrong falling crazy-in-love with patterns described by three single-bar highs/lows. For trading purposes, night owls might want to focus on the tail end of the chart, with its bull ABC projecting to 1115.25. Catching a ride north will carry the same risk as last night, however: all intraday patterns point higher, ensuring that “everyone” will be trying to get long. _______ UPDATE (10:39 a.m. EDT): The futures ensured that only a very diligent few would catch the rally when they launched at 2:15 a.m. off a gratuitous dip beneath Monday night’s lows. The high was 1118.75 — achieved, of course, on the opening bar. ES then retrenched to a so-far low of 1109.50, presumably to load up for the next push.
Over at James Howard Kunstler’s sensational blog, Clusterfuck Nation, there’s a well-reasoned argument that “this recession, or whatever you want to call it,” is actually a “compressive deflationary contraction” — i.e., “an accelerating systemic collapse of activity due to over-investments in hyper-complexity.” Read the complete essay by clicking here.
The lesser charts were transformed into rubbish by last week’s price action, but we can still use a vague midpoint support at 1182.80 to warn of the next bout of pseudo-weakness. Its breach on a closing basis would portend possible additional downside over the near term to 1161.70 — one downside target among many at this point. Alternatively, an upthrust today touching 1207.00 would put bears mildly on-the-run.
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The next upthrust has the potential to reach 131^05, so we should look diligently for ways to buy this minor correction. I’ll recommend a 126^08 bid, stop 126^04, but you should be on the lookout for camouflage opportunities arising from any minor ABC rally, since it’s possible the futures won’t retrace all the way down to the Hidden Pivot support at 126^07. As of around 9:30 p.m. Sunday night, the three-minute chart looked like the best place to scout for the turn. _______ UPDATE (10:45 a.m. EDT): The futures dove sharply to a low at 126^11, three ticks from our bid, before bouncing robustly. Cancel the order, since our odds will never be quite as good when we settle for sloppy seconds. The original target remains theoretically valid nonetheless. For the record, there was a camouflage entry signal at 126^17 around 10:06 a.m. EDT that would have gotten you long for a very short ride to as high as 126^26.
Forecast Leaves 232 Dow Points to Go
by Rick Ackerman on July 27, 2010 12:45 am GMT · 3 comments
Stocks on Monday achieved a bit less than a third of the gains we had unenthusiastically projected for the week, with the Dow Industrials settling exactly 100 points above Friday’s close. We say we were unenthusiastic in forecasting a 350-point rally because share buyers themselves have shown little enthusiasm for the task. Even so, they’ve continued to lift offers more or less steadily, producing a rising trendline with a pitch of about 12 degrees. We’ve seen steeper grades driving through Nebraska, but that’s not the point. In fact, the lukewarm, steady buying that has persisted in July is exactly the kind of buying that typically accounts for most of the stock market’s gains most of the time. This summer’s rally has been punctuated by short squeezes and gap-up openings » Read the full article