January 2009

The retail picture looks so bleak it's difficult to imagine which stores will survive, other than a few obvious ones like Safeway, Apple and Walgreen's. Verizon, for one, looks like it will be around for a while. I had to take a number the other day when I visited a crowded Boulder outlet to exchange a Bluetooth device. What a mob scene! When you sign in at a kiosk using a touch-screen, your name instantly appears on a wall monitor, listed beneath the reason for your visit:  sales, customer service or technical support. There looked to be at least two dozen customers, but once your name is on the queue you can relax, since you know they'll get to you eventually.  The crowded showroom reminded me of the 1950s, when stores seemed far busier most of the time and there were plenty of sales clerks. These days, the traffic seems so sparse at mall department stores in particular that you wonder how they'll survive. Or maybe they won't. Macy's just announced it was closing eleven stores, but if the local outlet got a reprieve, it's hard to imagine how thin the traffic must be at the stores that are about to be shut down. Competitor Nordstrom's hasn't made any ominous announcements, at least not yet, but it seems like only a matter of time. The retailer's shoe department has always been a sales powerhouse, but one wonders how long footwear can carry the whole chain. My errands that day also took me to Circuit City. The firm had declared bankruptcy just hours earlier, but the liquidation sale was not scheduled to begin until the following day. Immediately after the sale began, bloggers were reporting that genuine bargains were hard to find.  Of course, that's bound to change between now and

The futures have earned a green light to at least 12.585, a Hidden Pivot, but they've been taking their sweet time getting there. There is a second bullish pattern at work as well, and it projects to 11.985. Because the sibling midpoint of this resistance, 11.155, has already been exceeded, odds early Tuesday morning appeared to favor the bulls. For night owls, the most appealing place to try bottom-fishing would be at 10.970, using a stop-loss as tight as three ticks. _______ UPDATE: Silver has climbed higher as expected, but the bounce came off a low at 10.920 that was five cents below where we'd looked to get in. The rally targets given above remain valid, although there is another at 11.950 that is equivalent to the one at 868.40 that I've identified in Gold.

A midpoint HP resistance at 8272 is equivalent to the bullish trigger point flagged in the E-Mini S&P. If the futures were to break decisively above it (i.e., exceed it by 6-8 points), that would telegraph more upside to as high as 8438 over the near term. Shorts can be attempted at 8270 with a stop-loss as tight as 8277, but you'll be on your own if the order fills.

If another selling panic develops, try bottom-fishing at 130^05 with a stop-loss as tight as 130^01. Switch to a 5-tick trailing stop on a bounce touching 130^22, and use 131^06 as a minimum upside objective. _______ UPDATE: A downtrend that has been relentless made short work of our stop-loss, producing a trading loss of about $132.

There are no clear benchmarks to gauge the staying power of Friday's sharp rally, although it looked like it would continue to at least 851.80 before encountering even mild resistance. This relegates a 766.60 downside target to the back burner for now, but please note that it will remain valid in theory until such time as the futures print at 892.10, a tick above the point 'C' high shown in the chart. _______ UPDATE: Shortly before 2 a.m. Tuesday, the futures were trading 829.60, needing only a pop above 834.80 to put bulls back in charge. Failing that, or perhaps in advance of it, the most promising place to attempt bottom-fishing with a very tight stop-loss appeared to be 822.20, a Hidden Pivot support. _______ FURTHER UPDATE: Gold had quite a rally overnight, although the so-far $38 blitzkrieg came off a low at 823.30 -- $1.10 above where I'd suggested trying to get long. The spree looked like it was good for at least 868.40, a Hidden Pivot that seemed likely to show some stopping power.

Wild, whacky rallies are not necessarily bullish, especially when they can't even make it to our targets. Thursday/Friday's deftly orchestrated short-squeeze went no higher than 857.75, well shy of the 864.75 target that had been our price objective as the week drew to a close. Under the circumstances, it's probably a good time to mention a very bearish target at 675.50, a Hidden Pivot support shown in the chart. The midpoint associated with it lies at 809.00 (my minimum downside objective at the moment), and we'd infer the lower number is likely to be reached if the futures close beneath the midpoint for two consecutive bars on the weekly chart. Initially, though, 809.00 looks like it will be a great place to play for a bounce, so keep your bulletin launcher switched on if you'd like to be apprised in real time if and when the opportunity arises. ______ UPDATE: The futures subsequently got short-squeezed to 865.75, one point above our target, but bears kept their cool and the tide of hysteria quickly receded. (Note: If you shorted there on your own initiative with a tight stop-loss, you could have booked a one-day profit of as much as $1600 per contract, covering at the subsequent low, 832.50.) As of 1:30 a.m. Tuesday, a so-far weak bounce threatened to goose the bears once again by reaching 852.25, a midpoint pivot. If it's exceeded, we'd be forced to concede that more upside over the near term to 872.00 is not merely possible, but likely.

Yesterday’s news seemed oddly becalmed, as though world events were in a holding pattern. Until a U.S. Airways jet crashed into the Hudson River in the middle of New York’s afternoon, it was the kind of day, news-wise, when the seasonal debut of American Idol could claim headline status on Google News, at least for a short while. TV-dom’s big story of the day was that one of AI’s contestants, nominally a singer, showed up in a bikini. Bloggers appeared to divide over whether she was too skinny to get excited about. Here’s her photo, so judge for yourself:     A sampling of the news just before the airline mishap suggested the furies were at rest: Democrats Unveil Stimulus, and Republicans Cry ‘Pork’; Israel Focused on War Aims in Gaza; Vicks’s VapoRub Hazardous for Children Under 2. Concerning that last item, Baby Boomers who so far have survived a potentially toxic exposure to Vick’s are probably breathing a literal sigh of relief.   Even the stock market was quiescent in its psychotic way. Newscasters would note in their daily business summaries that the Dow Industrials had closed up 12 points on the day. In fact, that was the net result of a nearly 500-point swing intraday. We had seen it coming in yesterday’s touts, including a mini-crash in crude oil that would have knocked the likes of Katrina Darrel from the front page of Dubai’s tabloids. Would that 2009 passes so very peacefully that any of us might remember Katrina Darell come December.   ***   Inflation vs. Deflation We continue our exploration of the inflation/deflation conundrum today with a contribution from Ranganathan Krishna, known by the handle “Ranga” in the Rick’s Picks chat room. He writes as follows:   “Your point is well taken that in good times

At day's end, the futures looked poised for a 23-point thrust to 864.75. The midpoint resistance lies at 847.00, just beneath the 848.50 high of yesterday's recovery spike. That could prove advantageous for us, since any progress above 847.00, even 2-3 ticks, would telegraph a breakpout above the visually obvious peak at 848.50. You could get long on a buy-stop accordingly, although I am recommending this trade only to those who understand how this might be done using a 'camouflaged' point 'X' entry. ______ UPDATE: Forty minutes into the session, the futures are coughing and wheezing their way toward 864.75, having tripped our Hidden Pivot alarm last night with a print at 847.50. However, staying long would have required cunning and courage -- or better yet, obliviousness to risk management -- since the rally overnight was as choppy, tedious and tortured as could have been imagined. This continues as I write these words, and it should be no comfort to bulls that the futures are struggling so hard to reach 864.75.

Yesterday's dipsy-doodle action did not disturb my forecast for a pullback to 766, but it did brighten thre outlook for the very near-term. That's because the bounce came off a low slightly above the 799.70 that had been predicted. My bullishness would ratchet up a few more notches if the futures can push above the two minor peaks shown in the chart. That would imply a print at 823.90.