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From the monthly archives:
December 2011
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Should I mention that yesterday’s 337-point rally was not impulsive on the larger intraday charts? Check out the 240-minute bars if you don’t believe me. Another measly 31 points would have done the job, but it looks like the panic-stricken shorts who powered yesterday’s wilding spree just didn’t have it in them. My hunch is that the rally will prove to have been a one-and-a-half-day wonder after bears have done their puking Wednesday morning. Still, because the daily chart actually is impulsively bullish, we’ll have to treat the expected pullback with the same deference today’s commentary has accorded Kim Jong Il. Allowing for the most bullish scenario I could possible see over the next eight trading days, my maximum rally target would be 12760, subject to midpoint interference at 12248.
The rally has made a mockery of the headline on today’s commentary. At the same time, it suggests that shorts had grown complacent, since bulls have never been capable of mustering this kind of buying power. Nonetheless, we must respect the fact that the upthrust is bullishly impulsive on the hourly chart and that it could go all the way to 1240.00 before hitting a Hidden Pivot impediment (A=1177.25 on November 30, B=1266.00 on December 8 = 1240.00 ‘p’). The proximal cause of this short-squeeze is an apparently successful auction of Spanish debt and an uptick in housing construction. Interestingly, the uptick is mainly in multifamily apartments, implying that the powerful bull market in residential rentals is starting to get legs.
Minor targets were exceeded so easily yesterday that we should skip the small stuff and consider bigger bearish patterns. One projects to 26.010, and we should consider it a done deal if the 27.970 midpoint support with which it is associated gives way easily. Both numbers can be bottom-fished, but more immediately we should look for subtle opportunities to get short. Just such a one was manifesting itself on the hourly chart as we went to press, and I’ll therefore recommend shorting on a sell-stop if the 28.855 entry trigger is hit. Take profits on half the position at the 28.755 midpoint, and on another 25% at D=28.550. With the single contract that would remain from an initial position of four contracts, you should use a bullish impulse-leg stop on the one-minute chart until morning. ______ UPDATE (2:13 a.m. EST): The short triggered around 9:45 p.m. but was stopped out at around 1:26 a.m. The theoretical loss was 11 cents, or $550 per contract. There was no chance to take a partial profit to reduce the risk, since the downtrend did not quite reach the 28.755 midpoint support of the pattern where we would have done so. In order to learn from this trade, I’ve substituted a 15-minute chart for the 60-minute so that you can see clearly where it went awry. To begin with, the 15-minute chart was where we should have looked for camouflage, not the hourly. And, as you can see, the ‘X’ where we initiated the short trade on the hourly fell within a bullish A-B impulse leg on the 15-minute chart. Under the circumstances, camouflage if properly applied would have told us to get long rather than short — and with much less risk. If you took this trade, please let me know in the chat room so that I can keep all who got trapped closely apprised, in real time, of the next Silver trade. And one more note: We should be especially careful about taking longs from these levels, since last week’s low exceeded by 30.5 cents an important midpoint support at 28.425 that I flagged here five days ago.
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Prospect of World Peace Sends Stocks Soaring
by Rick Ackerman on December 21, 2011 3:52 am GMT · 14 comments
U.S. stocks showed unbridled enthusiasm yesterday for the changing of the guard in North Korea, tacking 337 points onto the Dow Industrial Average. Could heir apparent Kim Jong Eun be the Man of Peace the world has been waiting for? It sure looked that way on Wall Street, where a wave of optimism about something fabulous swamped sellers from the opening bell. Even if the young Kim – reportedly a huge basketball fan like his dad — merely slows North Korea’s mischievous transfer of nuclear weapons technology to Iran’s mullahs, jihadists and terrorists around the world, it would be the best Christmas present our crisis-fatigued planet could receive. Small wonder, then, that North Koreans were sobbing in the streets as they grieved the loss of their Dear Leader. And very dear he must have been, to judge from the tens of thousands of mourners who lined up for hours to pay their respects as Kim Jong Il lay in state, ensconced in a glass-covered coffin. Was he smiling when he died? We couldn’t tell looking at the picture below, although we won’t be surprised if a future biographer reveals that Kim, who’s name means “regal hill,” was a world-class kibitzer in private. » Read the full article