July 2009

I've taken pains to chart out a potential trade in the E-Mini Nasdaq, but even if it doesn't pan out we can use the analysis to spot a bullish breakout (or perhaps bearish breakdown).  The ES was putting out similarly bullish vibes early Thursday morning, wafting above a midpoint resistance at 977.25 whose breach augured 988.00 over the near term.

After giving up most of the substantial gains achieved a couple of weeks ago, UNG is struggling for traction.  The effort would gain credibility with a push exceeding  12.77 today, but otherwise we should look for a re-test of multiyear lows recorded earlier this month just below 12.

The dollar has stepped back from cliff's edge with a moderate rally now entering its third day. However, the thrust would need to touch 83.23,  five percent above current levels,  to put the daily chart in bullish gear.

A potential camouflaged entry signal was developing early Thursday morning, based on the pattern show in in the accompanying chart.  What is required to trigger a buying opportunity is a gentle probing above peak #1 (1608.00) that does surpass peak #2 (1609.00) without first pulling back the required 9.25 points (i.e., 0.618 of a k-A segment measuring 14.75 points).  I usually don't provide such abstruse details, but the trade has home-run potential if it meets the rather narrow set of parameters required, and I therefore wanted to provide enough information to allow experienced pivoteers to track it's development in the chat room.  _______ UPDATE (7:51 a.m. EDT): An overnight rally blew our camouflage opportunity to smithereens with an initial thrust to 1612.75 that easily exceeded both peaks shown in the chart. DaBoyz having failed to conceal the eagerness of buyers even when relatively few were watching, we should brace for more short-covering later this morning.

The futures were mucking about in a narrow range early Thursday morning, seemingly reluctant to traverse the remaining distance to a _____ target broached in the chat room.  Night owls can try bottom-fishing at ______, a midpoint support that will remain valid as long as 931.10 is not touched first.______ UPDATE (8:08 a.m.): Shifting to the December contract, if you drop down to the 5-minute chart, you'll see why the overnight rally lacked real guts. Notice how its peak at 937.00 failed by a hair to take out two look-to-the-left peaks made on the way down yesterday around 9:10 a.m.

We deconstructed the Mini-Dow's hourly chart during yesterday's tutorial, discovering that this vehicle's recent high at _____ fell close enough to a longstanding rally target at _____ to warrant our close attention. The weekly chart yields a slightly different perspective, but one that could prove useful nonetheless.  I've flagged its two targets at, respectively, ____ and ____ and consider these high-odds objectives. Moreover, if the first is exceeded on a closing basis or by more than 15-20 points  intraday, odds of a move to the second would shorten significantly. Since we never want to chisel these numbers in stone, we'll also be paying close attention to any signs that the bear rally may be dying. To be more specific, this would occur with the creation of a bearish impulse leg on the hourly chart. 

The lazy drift of stocks has become almost too boring to watch, although we dare not avert our eyes for fear of missing Wall Street's next wilding spree. During the last four sessions, the broad averages have hit bottom early in the day after easing lower overnight. In each instance, the Dow Industrials were down about a hundred points before the selling dried up.  Then, four hours worth of see-saw action ensued. Finally, in the last hour or so, with bulls and bears alike quite frazzled, shares recouped most of their losses in a flurry of short-covering, settling near their intraday highs. This pattern is shown in the chart below. Usually, when the stock market's behavior becomes so repetitious that we see easy opportunity in betting on it, the game changes. And that's about where we are now - i.e.,  all but certain that, in order to reap effortless gains today, we need only buy an E-Mini index contract an hour or so into the session, when the Dow is down around a hundred points, and then sell it at a higher price five hours later. 'Curing' Greed So, how might the game change in order to thwart us from making money so very easily as that  - or, nearly as likely, cause us to lose our shirts by betting on the obvious?  One plausible scenario is that stocks will continue to fall after reaching in the first hour what we -- meaning you, I and nearly everyone else -- will mistake for the day's low. That is a common way by which such greedy expectations as we have come to hold are often "cured." A second, easily imaginable, way would be for stocks to open higher and then continue up, up and away, stranding and confounding the multitudes who had planned

On an asphyxiatingly dull day -- the fourth in a row -- we stumbled upon evidence that all of this brain-numbing tedium could be the set-up for a nasty plunge. This was the conclusion we drew after looking at the E-Mini-Dow, which recently peaked within 14 points of a Hidden Pivot target that had been more than three months in coming. To leverage this possibility, we considered some option strategies that involved initiating calendar spreads with far-out-of-the-money put options. Liquidity is a concern, so we looked at various alternatives. We also looked at some Comex gold charts and found reasons to be patient.

Although I am quite skeptical of  President Obama's health care plan, I want to present his side of the argument in the best possible light so that you can decide for yourselves.  To that end, I have provided a link below to an NPR interview with Maggie Mahar.  Maggie is not only the best reporter I know -- among the very few to have received a five-star rating from Forbes Media Guide --  she is a long-time personal friend. (Her first story, freelanced to Barron's, was the poison pill saga in which I was involved.)  She is diligent, honest and meticulous in mustering her facts, and that is why I am recommending this interview with Terry Gross to all.  Click here  to access either the audio version or the transcript.