It’s Sunday night, around 10:34 p.m. EDT, and sellers are attempting to drive the futures down to a correction target at 1353.30. That’s a Hidden Pivot support, and you can try bottom-fishing there with a 1352.80 stop-loss. If the stop is hit, consider it a warning of more weakness over the near term — presumably to at least 1349.00, a Fibonacci-based support from the hourly chart. Looking at a somewhat bigger picture, a 1415.40 rally target given here earlier will remain valid unless 1325.60 is exceeded to the downside. _______ UPDATE (10:29 a.m. EDT): My 1353.30 target caught the low of a so-far $18 bounce within a dime, so even if you used a stop-loss as tight a two ticks, you got on board safely. If you initiated the trade with a multiple of four contacts, keep 25% of the original position for a potential home-run. Single-contract longs should use a 1362.10 stop-loss for now, o-c-o with a 1380.00 objective, since a print at the former is where a bearish impulse leg would be signaled on the 3-minute chart. Officially, I’ll track a two-contract long for your further guidance, with one of the contracts stopped as above, o-c-o.
From the monthly archives:
October 2010
Auerbach & Grayson’s latest report amplifies the theme of today’s commentary, admonishing us to remain bearish on the dollar even though every contrarian bone in our bodies may be telling us to do otherwise. Click here for the full report.
We hold 800 shares with an adjusted cost basis of 13.07. There are two Hidden Pivot targets just above — at 28.61, 22 cents beyond yesterday’s high; and at 29.00. As a hedge, I’ll recommend buying four November 29 puts for around 1.05 if SLW gets within a nickel of the higher pivot. I may update guidance, so check back intraday.
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Prospects for the dollar have become an obsessive concern in the chat room — and rightly so, since even a hint of strength is going to bring gold and silver prices down hard. For that reason, I will be tracking DXY’s oscillations very closely in the days and weeks ahead. So far, however, as the dollar has continued to fall, I’ve seen nary a flicker of life. Promising impulse legs have fizzled like soggy firecrackers, and downtrending ABCs have consistently exceeded their ‘D’ targets. To me, this spells a continuation of the dominant trend.
Nor am I persuaded by the arguments of some well-regarded chartists who have been calling for a turn. Their bullishness seems to be based on little more than the fact that the dollar has been sold down so hard, and for so long, that, well, it is simply due for a rally. My response is that it is equally plausible the dollar has finally slipped into the vortex that will take it through all previous supports to scary new lows. We shall see, but in the meantime let’s keep an open mind. Most immediately, we’ll set a benchmark for today at 77.41. A rally touching that price will have exceeded two external peaks on the 30-minute chart, one of them a look-to-the-lefter “along the wall” of a steeply declining price bar. A minor pattern (also shown) is already in progress, but it projects no higher than 76.98 if the 76.65 point ‘C’ remains intact. ______ UPDATE (12:45 p.m. EDT): No surprises. DXY has topped so far today at…76.97. Click here to access Auerbach and Grayson’s latest report, which for purely technical reasons is as bearish on the dollar as I am.
As of mid-evening Thursday, the futures had recouped most of the ground they lost after sellers swarmed a steep, pre-dawn rally. The high of that spike was at 24.950; so far, the recovery has rallied to within a dime of it, gaining 15 cents off the intraday low. My minimum upside target for the near term remains 25.365, but a pullback today exceeding 23.995 would temporarily kill the momentum by creating a bearish impulse leg on the hourly chart. The look-to-the-left low that makes this so is highlighted in the accompanying chart.
The $17 selloff that followed yesterday’s pre-dawn spike did nothing to disturb a 1415.40 rally target given here earlier. Notice in the accompanying chart how the low of the pullback came within an inch of touching a Hidden Pivot midpoint at 1370.50. That number was resistance when the futures broke through it a day earlier, but it is now acting as support. Shortly after 9 p.m. EDT Thursday, the December contract appeared reluctant to unleash another thrust and had stalled at a level equal to a 1383.90 peak recorded intraday. It’s too early to say whether this portends sluggishness on Friday, but it does suggest that buyers are not feeling as feisty as they were the night before. A day of backing and filling might be just what this rally needs.
For a second straight day, the futures pounded on a Hidden Pivot rally target at 1182.25 without getting past it. Since the target was eight days in the making, a three-day consolidation would be about right. Accordingly, we should look for perhaps one more day in the woods before buyers emerge victorious yet again. Night owls can try bottom-fishing at 1168.25, a midpoint support shown in the accompanying chart. A three-tick stop-loss is about as much as I would risk, but if it’s triggered, the futures would be signaling more downside over the near term to as low as 1160.00.
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The Eve of Destruction
by Rick Ackerman on October 18, 2010 4:18 am GMT · 34 comments
(Are stocks and Treasury bonds w-a-a-y too revved-up over the prospect of more quantitative easing? Our good friend Doug B. thinks so, and he is predicting that it’s all about to end badly for the bulls. Americans are about to experience a collapse in the standard of living, says Doug, and there is nothing we can do about it. The good news is that the pain and sacrifice that lie ahead will allow us to rebuild a balance sheet that has left the nation asphyxiated by debt. A financial advisor based in Boulder, Colorado, Doug is a disciple of the legendary Bob Farrell and an occasional contributor to Rick’s Picks. He is an outside-of-the-box thinker who has gotten the big trends right over the decade we have known him. In the essay below, he builds his argument one brick at a time with “gozinta” and “gozouta” — sophisticated accounting terms representing the generic sum of all inputs into an entity and the generic sum of all outputs from that same entity. RA)
I have two long held and very strong opinions — one about the stock market and the other about the Treasury bond market. I believe that, before the secular bear market in stocks that began in 2000 runs its course, we will be lucky if we do not achieve lower valuation levels than were typical of previous secular bear market lows. That implies a 6% dividend yield and a P/E multiple of eight on the S&P 500. (And I mean the index as a whole — more on that later.) In addition, I believe that the Great Bull Market in bonds, which began in 1981, will end in parabolic fashion. The consensus will believe that inflation is off the table for at least a generation and deflation is a certainty. A 1.5% yield on a 10-year bond will be rationalized because, with 1% or 2% deflation, » Read the full article