Monday, November 21, 2011

Wow, does NatGas ever look sick! We managed to wring a theoretical gain of more than $300 per contract trading from the long side last week, exiting on a 3.345 stop. However, judging from the way this crudball is eating through important supports, one could infer that the price is going to $2 or lower (not that that would cause anyone's heating bill to decrease by even one iota). Next stop: 3.242.  If you trade this one -- long or short -- it'll be catch-as-catch-can.  _______ UPDATE (November 22, 8:01 p.m. EST):  Just when lower lows were beginning to look all but certain, this zombie has rallied to within an inch of creating a bullish impulse leg on the hourly chart. If it should do so by popping to 3.484 today, the December contract would become a bull trade on the hourly chart for the first time in as long as we can recall.

I've flagged an important Hidden Pivot midpoint at 28.385 that remains viable as a minimum downside objective for now. However, bulls would hint that they're capable of turning things around sooner on a print today above 32.675, a peak on the 5-minute made last Thursday on the way down.  A more decisive, bullish verdict would be rendered with an impulse leg on the hourly chart that exceeds 33.265.

An important Hidden Pivot at 1627.30 is my minimum downside objective for now, although bulls could regain the advantage with a quick surge to 1833.00, a tick above an external peak recording September 19.  More immediately, we could look for a far subtler sign of recovery on a print today exceeding 1747.70. The significance of this number is shown in the chart.

After opening on a small gap down Sunday night, the futures have flatlined for nearly six hours. This tedious dirge has left an 1194.50 downside target given here on Friday undisturbed, although I'd suggest using it to bottom-fish only if entry is via camouflage. (Check Friday's post in the archive for further details.) A bigger-picture target lies at 1152.25, the midpoint support of the pattern shown. Click here if you’d like to learn how to do these trading tricks yourself.

Early Monday morning, index futures were off surprisingly little considering that the weekend just past seemed like a great time to get one's own house in order in anticipation of  Europe's impending collapse.

[We used to think Nobelist Paul Krugman was the Looniest Economist in America, but Rutgers professor James Livingston recently emerged as a solid contender with an absolutely dumbfounding op-ed piece in the New York Times that said, essentially, that America’s wealth has come mainly from Government spending and consumption, not from savings and investment.  In the essay below, we give our friend Edward Furst, a member of Young Americans for Liberty, a rebuttal opportunity. RA] We all know that the New York Times isn’t exactly a bastion of free-market thinking. But a recent op-ed by Rutgers Professor James Livingston, a guy who makes Paul Krugman look like Milton Friedman, went beyond the pale of economic sanity.  His basic contention is that economic growth comes, not from private investment, but from “consumer debt and government spending.”  Livingston points to the increase in per capita GDP over the last century despite the relative atrophy of private investment as a percentage of GDP, the growth in government spending, and the general increase in consumer debt. Here we encounter the age-old conundrum of historians unschooled in economic thought (Dr. Livingston has a bachelor’s degree in British and American literature, a masters degree in Russian history, and a doctorate in American History). In a rebuttal to this op-ed, George Mason University Ph.D. economics professor Don Boudreaux aptly noted that “Because each dollar successfully invested raises GDP by multiple dollars, net-investment’s decline as a share of rising GDP… is evidence of the impressive success of private investment…”  But even this analysis seems to take for granted the efficacy of Gross Domestic Product as a viable metric of economic performance. Building Keynes Monument Imagine for a moment that the Federal Government had embarked on a “stimulus” program to erect a giant obelisk commemorating the life’s work of