June 2010

I've provided benchmarks in today's E-Mini S&P tout by which we could judge the staying power of any short-squeeze that may be lurking.  For the Indoos, the squeeze would need to surpass 10488 to have entertainment value for us, and the rally would need to be unpaused on the hourly chart once above 10315.

I bought some DIA puts on the close Friday, announcing it in the chat room as a wild-eyed speculation.  I must confess, however, that splitting hairs over put options these days reminds me of a Gahan Wilson cartoon of two golfers on a putting green, nuclear mushroom cloud billowing in the background. "Oh, go ahead and putt out," says one. "It'll be at least another minute or two before the shock wave hits."

Relative to a 1086.00 rally target, the E-Mini S&P ended the day with mischief on its tiny mind, having poked up to 1087.25 in the closing minutes of the session. My gut feeling is that, so very clear was the target that it would not have been exceeded even by a tick unless the futures were intent on moving higher.  We shall see.

The futures suffered their most savage drubbing in a while, bottoming so far at the exact midpoint of the pattern shown.  This implies that if they go any lower, the midpoint's 'D' sibling at 120^01 is likely to be reached, and precisely.

It looked like Gold was holding Silver back yesterday. Whatever the case, the futures appeared to be targeted on 18.500, or perhaps 19.095 if any higher.  There is just one further, hidden impediment in-between: 18.705.  If Silver should turn weak, however, key support lies at 17.720, a Hidden Pivot midpoint that comes f rom the hourly chart (A=18.735, B=17.195, C=18.490).

Even as we got long briefly during yesterday's open house and exited the trade shortly thereafter for a small profit, I was warning of more sinkage over the near term to at least 1207.00.  Bid there this morning with a stop-loss as tight as 1206.40 -- or at 1205.60, stop 1204.90 if you want to play it more conservatively, at the risk of missing the turn. ______ UPDATE (2:28 p.m. EDT):  The day session began with an Ali Shuffle that took the futures higher. They traded no lower than 1217.00 overnight, denying us the opportunity to buy at fire-sale prices. The 1207.00 target will remain valid in theory until such time as 1236.90 (aka point 'C') has been exceeded, but this looked likely with the futures rallying so robustly today.  If the rally continues, the key resistance lies at 1244.40, an HP midpoint associated with a 'D' target at 1272.60.

I'm just about analzyed-out after yesterday's four-hour open house. The E-Mini S&Ps were especially tiresome, since I had miscalculated the rally target by two ticks.  I gave a 1085.50 objective during the session, only to discover near day's end that the actual target should have been given as 1086.00. This made a crucial difference -- at least, initially it did -- since, according to our custom, a 1085.50 objective would have required a 1086.25 stop-loss; whereas a short from 1086.00 would have required 1087.25.  What a relief it was, then, when the futures poked their rabies-infested snout up to 1087.75 in the closing seconds of the day, hypothetically stopping out any shorts from the higher number.  I don't think I could have gone on living if the futures had plummeted on Friday's opening without ever having gotten above 1087.  That would mean I'd have missed shorting the top we've been looking for so obsessively because of a calculator error (whose cause remains undetermined). And now, what can we expect for Friday?  As I mentioned in today's commentary, the futures looked too feisty at day's end to suggest they've exhausted buyers at 1087.75.  Also, the pattern from which the 1086.00 target was derived was so absolutely picture-perfect (see chart) that I doubt the target would have been exceeded, even by a tick, unless the futures were indeed headed higher.  For that reason, we should use the 1092.50 target shown in the chart to get short with a 1093.25 stop. ("If at first you don't succeed..."). One final note:  It is of course more lucrative to get long ahead of the rallies than to continually and serially try to impede the speeding freight train.  In the context of the current rally, which, in nearly-untradable fashion, has been gathering momentum overnight and gapping higher on the opening, the best way to get aboard is to simply jump on

If the chart below were your comatose Aunt Minnie’s EEG, her doctor might tell you it was time to pull the plug. “There’s still some electrical activity in you’re aunt’s brain,” he would explain, “but it seems highly doubtful that she will ever return to a normal and productive life.”  Just so, even if it is a stock chart that we have reproduced, not an electroencephalograph. Specifically, it is a graph of price action in the E-Mini S&Ps over the last three weeks, and it could be argued that it does indeed represent an accurate picture of brain activity – such as it is -- in the investment world. Whatever the case, there is no disputing that every little squiggle was put there by a human being, or at least by a computer programmed by a human being, and that fear and greed are manifest at each and every peak and trough. We would also note that the ups and downs traced out in this chart, although somewhat irregular, do not evince a sense of crisis or even urgency. There is just not much going on, as we can all agree.  Would it therefore surprise you to learn that the dainty little fillip toward the right-hand edge of the chart represents yesterday’s nearly 300-point rally in the Dow Industrials?  Amazing how insignificant it looks when placed in perspective. The nightly-news anchors will give this latest supposed evidence of Wall Street’s bullish mood ten seconds’ worth of spin, and then most viewers will simply shrug it off, wondering what the heck it was that investors could have been celebrating. In fact, as the chart makes clear, investors were simply continuing to do what they’ve been doing since mid-May – i.e., screwing the pooch. It’s Friday! More of the same as the

http://www.youtube.com/watch?v=NOzR3UAyXao