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From the monthly archives:
December 2010
I’ve reproduced the Mini-Dow’s chart because it contains an opportunity similar to the one discussed in today’s E-Mini S&P tout. Note how a quickly formed A-B-C has begotten a tedious upward grind whose so-far high lies just shy of a longstanding ‘D’ target at 11491. You can short it with a stop-loss as tight as four ticks, but if the stop is tagged I’ll suggest trying again at 11510, a target derived from using the lowest low shown in the chart as point ‘A’. _______ UPDATE: The futures topped for the day at 11487, four ticks below the target, but I’ll suggest canceling the order rather than trying for sloppy seconds.
The distinctive b-c pullback on Wheat’s hourly chart suggests that the 607.25 Hidden Pivot target of the pattern shown will be worth shorting. Let’s try it with a single contract and a three-tick stop-loss. You’ll be on your own if the order fills, but you should lower the stop to make the trade risk-free if the futures pull back from the target by more than 2.5 cents. ______ UPDATE: We’ll back off the trade, since the rally looks powerful enough to heat-seek the 617 high recorded on November 9.
Long 800 shares with a cost basis of 14.27 against eight January 34 puts held for 0.77, we’ll leave our hedged position unchanged for now, since Silver Wheaton has been working on a bearish impulse leg since last Friday’s stab lower on the hourly chart. The stock remains vulnerable to a fall to as low as 35.05 as it noodles around near the 37.645 midpoint support associated with that target.
The futures look like they’ll need to retrace a bit more from Monday’s high before they’re properly recharged for another thrust matching yesterday’s. Although I rarely pay attention to or mention the k-A segment, you can see in the chart how the pullback missed reaching the window (‘W’) line by two cents. It comes in at 29.235, and my hunch is the first signaled point ‘x’ entry following a legit retracement will be a good signal to act on. Even so, I’ll suggest a camouflage entry, since the implied 19-cent stop-loss if you were to go by-the-book is just too much. Please note that this tout is more technical than most because the pattern we’re looking to trade is still a work in progress.
The futures spent the day jabbing, sticking, bobbing and weaving immediately above and below the 1387.40 threshold where I’d said bulls would start to come alive. How odd, then that they achieved little more than that in the space of six hours. So that we don’t get sucked in, let’s raise the bar today to 1396.40, a tick above a commanding peak on the hourly chart and the point where the bullish impulse would be revitalized. On the off-chance that the bad guys beat the futures down hard, you could try bottom-fishing at 1371.60 with a stop-loss as tight as four ticks.
I’d forgotten about the 1250.25 rally target I’d posted for the December contract but was reminded of it when a trader who recently graduated the Hidden Pivot course reported that he’d interpolated the target for the March contract, gotten short there with a 1.00-point stop-loss and come away with a small profit. The relevant pattern is shown in the accompanying chart, and I’m embarrassed to say that it’s a type of pattern that, in teaching mode, I usually effuse over, formed as it was by the relatively quick completion of the ABC phase, followed by a grind to ‘D’ that seemed to take forever. Our arguable edge here comes from the fact that the C-D leg takes so long to complete that Gartley and other 123-pattern players get bored to death with it and…um, forget about it (just as I did). As our student/trader proved, however, it pays to keep track of such things and to be patient as such patterns develop. Creating a matrix that lists all patterns and their respective points X, p and D is the best way to do this, and that is why I’ve begun to include the construction of a matrix in the Hidden Pivot course.
(This one has drawn some interesting comments — nearly two dozen of them as of Monday evening — so I’m letting it run for a second day. RA)
It’s come down to this: Economically speaking, our very survival depends on how many flat-screen TVs, major appliances, sweaters and pearl necklaces are sold by Christmas. That, at least, is the apparent view of the mainstream media, whose obsessive focus on signs of a “green” Christmas has more than the usual whiff of desperation about it this year. Do they not trust the simple fact that the stock market has been rallying for nearly 21 months, or that the Dow Industrial Average is currently trading within 19 percent of its all-time high? If those are not signs of a robust economic recovery, then what would be? We ask this question facetiously, of course, since no one outside of the nation’s newsrooms could possibly believe that Christmas sales, no matter how strong they » Read the full article
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Muni-Bond Market’s Descent into Hell
by Rick Ackerman on December 22, 2010 4:49 am GMT · 16 comments
Just when it looked like the alleged economic recovery couldn’t get any weaker without extinguishing itself entirely, the municipal bond market has gone to hell. And just like in hell, there is no exit – at least none that we can imagine. Here’s why: Municipal and state borrowers who are on the ropes must pay a premium to continue borrowing; this drives their budgets deeper into the red, causing ratings downgrades that in turn raise borrowing costs even more. A vicious cycle, for sure, and it sounds just like much of Europe’s predicament doesn’t it? Except that, for strapped U.S. cities and states, there is no IMF to pretend to bail them out. And while Europe’s erstwhile deadbeats, the PIIGS, get plenty of time to work on balancing their budgets through measures of “austerity” (Merriam-Webster’s Word of the Year, by the way), U.S. cities and states must bring their budgets into at least a fleeting semblance of rectitude before » Read the full article