Monday, July 25, 2011

Rick Ackerman discussed the US and Greek deficits with Al Korelin on this past weekend's edition of The Korelin Report. The entire show can be heard here, or you may listen only to Rick's segment here.

Most immediately, a rally target at 41.205 still beckons -- trail's end for a minor pattern noted here on Friday. That should be ambitious enough for the moment, and so I won't get all exercised about a bigger picture that portends perhaps something more. Nevertheless, it should be noted that a crucial test of bulls' resolve lies at 42.330, where a look-to-the-left peak etched itself into the hourly chart as the futures plummeted from their highs in early May. This resistance, small but important, is shown in the chart, and the futures will have to get by it on the first try to revitalize the bullish energy of the intraday charts.

The futures continue to play "Pong" off the Hidden Pivot midpoints of ABCD uptrends and downtrends, although bulls are obviously winning if you ignore last week's sideways consolidation. The 240-minute chart shown gives us two targets to shoot for in the days, or perhaps weeks, ahead: the first lies at 1626.30; the second, given here previously, at 1652.00.  Although there is yet one more lower point 'A' that I have not used, with a corresponding 'D' target at 1727.60, my hunch is that a move to 1652.00 will require a lengthy consolidation to set-up a subsequent thrust. Whatever happens, we shouldn't take a move to the two lesser targets for granted, since, as I mentioned here on Friday, price action at current levels is looking increasingly toppy. Out first hint of serious weakness would come if the corrective pattern begun off Friday's peak exceeds its 'd' target.  We can trade this pattern nonetheless, using a 4-minute chart and the coordinates A=1606.50 (11:32 a.m. EDT); B=1598.80; and C=1603.50.  The 1595.80 'D' target thereof can be bottom-fished, if not via camouflage, using a 1595.90 bid and a 1595.30 initial stop-loss.  P here is 1599.60, a corrective low hit exactly at the final bell.

Still bullish, and there's no change in the forecast (although it is only strict adherence to my coldly mechanical forecasting system that allows me to make my peace with such a preposterous outlook). I doubt it would survive a Moody's downgrade of Spain, however -- which implies that Iberia is all but guaranteed a week or two of breathing time pending a rally in the E-Mini S&Ps to at least 1388.75.  Europe could fall any day now, financially speaking, but perhaps it would be historically more appropriate for this to happen in August, a month of destiny?  In any event, night owls should look for a possible buying opportunity near the 1335.75 midpoint of the pattern show, assuming it survives Sunday's opening.  Please note, however, that the futures would be signaling more slippage to at least 1328.75 if the midpoint gives way. _______ UPDATE (1:23 a.m. EDT):  The Sunday Night Sleazeballs evidently think widows, pensioners and John Q. Public will fall for the news media's scary drumbeat about there being "no deal" in place ahead of Monday's opening. The E-Minis are falling hard tonight, for sure, but I read it as a shakedown engineered by ripoff artists intent on buying at fire-sale prices once they've succeeded in exhausting sellers.  Anyway, we'll be able to test this theory with two Hidden Pivot supports not far below: at 1320.75, a midpoint; and at its 'd' sibling, 1310.50. You'll find these coordinates on the 15-minute chart, where A=1342.50 on July 22 at 4:15 p.m. _______ FURTHER UPDATE (11:13 a.m. EDT):  The futures have rallied sharply after making an overnight low that was just 1.25 points from the midpoint noted above.  Although they have yet to recover to "unchanged," it would appear the worst of the engineered selling is over.

Securities markets were set to open Sunday night with no U.S. debt deal in place to calm investors.  This is the angle the news media were playing up, but it's just a bunch of baloney. My guess, implied in today's commentary, is that the markets will ignore the supposed deficit "crisis"  this week much as they ignored it last week -- i.e., by cruising blithely higher. In the meantime, don't believe there's a real crisis brewing over the debt-limit, which is just a side-issue.  It's just the news media doing what they do best:  going off the deep end with drummed-up scare stories because they're too stupid and too lazy to report on substantive issues. Democrats and Republicans will ultimately find a way to compromise away the real issues and nothing will have changed. Only the coming Great Financial Collapse can do that -- and don't be surprised when the mainstream media tries to tell us that "no one"  saw it coming.

Who needs a Plunge Protection Team when there’s enough funny money around, apparently, to keep stocks buoyant no matter what kind of mayhem is shaking the real world?  Last week was that kind of week. And Friday that kind of day, each catastrophic event overshadowing the last.  Through it all, an obscenely glutted, seemingly imperturbable Wall Street barely even flinched.  The day’s first big news concerned revelations that Greece may effectively have defaulted when it accepted the terms of yet one more economy-crushing bailout earlier in the week. Did they actually default?  No matter. By mid-day, it was time to move on:  A lethal rampage literally exploded in, of all places, Norway, superseding the troubles of Greece, along with scary sidebar stories concerning what might happen when growing jitters over the deteriorating financial condition of Spain and Italy mutate into panic, as seems all but inevitable.  Cue up the clips from Norway:  In downtown Oslo, an Oklahoma City-style explosion ripped apart a large office building in the heart of the downtown.  Shortly thereafter, a gunman dressed as a police officer reportedly opened fire on teenage campers on the tiny Norwegian island of Utoya. Islamic terrorism?  Perhaps not. Amidst reports that nearly 100 had been murdered, there was conflicting evidence about the identity of the killer, who may have been a young, ethnic Norwegian farmer. Regardless of who is responsible, it will go down as the most violent attack Norway has suffered since World War II. By evening, however, it was the collapse of budget talks on Capitol Hill that topped the news, at least in the U.S.  Details were almost as sketchy as the news coming out of Oslo, although it would appear that House Speaker Boehner walked out on Mr. Obama because our soak-the-rich President couldn't resist piling on

Signs look favorable for a thrust that could eventually push Silver Wheaton above its all-time high at 47.60. There are two bullish things to note in the accompanying chart. For one, last week's chop looks like a consolidation above the big pattern's 39.17 midpoint. And for two, before the consolidation began, the stock poked above the look-to-the-left peak at 39.95, refreshing the bullishness of the intraday charts. With a rally target as high as 48.54 in prospect over the next couple of months, a very low-risk way to leverage the move would entail legging into a butterfly spread targeted on the 48 strike. I will provide further details during market hours as a specific plan comes into focus. (If you'd like to be on board for this one but don't subscribe, click here for a free trial that will give you all the benefits of Rick's Picks, including access to a 24/7 chat room that draws savvy traders from around the world.)

The two-week swoon in late June/early July left a sinkhole in the chart that raises doubts about the long-term veracity of the bull. However, the failure of last Thursday's plunge to take out a 123^19.5 structural support from July 10 is an encouraging sign.  A shift toward bullishness would be further corroborated if the bounce from the recent low exceeds a couple of peaks (see chart) on the hourly chart without having tested the Hidden Pivot midpoint of the still-developing pattern shown.  We await further evidence.