Monday, April 20, 2009

The Gold Bugs Index somewhat exceeded an important 341.01 rally target at its last peak, providing modest encouragement that the nasty selloff since has been corrective rather than impulsive. We'll know more if and when HUI encounters a Hidden Pivot support at ____, my minimum downside projection for the near term.

A while ago, I received a note from a New Zealand forecaster named George Carson who said he was getting very impressive results with a system based on "harmonic resistances, momentum and other readings."  He claims 100% accuracy going back two years, and so I asked him to signal me when his system had something interesting to say about precious metals. The signal came on Sunday, and I am sharing it with you by reprinting George's e-mail message below. We'll take a closer look at the details on Monday, since his list of stocks squares nicely with some chat-room favorites.  For the record, I am not expecting a turn in Gold until the June Comex contract comes down a bit more, to around 845.  George says that would be within his parameters, since his signals sometimes lead the action by 2-3 days.   Here's  George, who notes first of all that he is not a financial advisor, and that you should make your own decisions:           The following readings are very important: It appears that gold has now hit the wall and cannot fall further in this 90 day cycle I was expecting a peak of around 1030 at end of march; it did not happen Instead,  we have had Deutsche Bank rescue the Comex We also have IMF plan to sell maybe 400 tonnes of orange stuff but the feds and cronies / crooks their cartels and charlatans plus clever monkeys will soon run out of games On a scale where 20 or less is a must buy the readings are as follows: hui buy reads 18 at 1500 17th April gld buy reads 7 at 1030 17th April slw buy reads 5 at 1030 17th April slv reads 23 at end of day 17 April xau buy reads 8 at 1230 17 April skf buy reads 13 1400 17

There is still a rally target outstanding at ____, and it is that fact more than any other right now that suggests stocks will go at least somewhat higher before the six-week-old bear rally peters (or perhaps flames) out. Assuming the Indoos take a little rest before their next sucker's leap, we should look for the pullback to come down to at least ____, a midpoint pivot asssociated with the target. As always, an easy breach of that support would suggest that more selling awaits.

Here's the headline from Saturday morning's Boulder Camera  that pushed Colorado's big snowstorm off the front page: City Mulls Millions in Cuts.  Uh-oh. Could it have been just a few short weeks ago that we were reading about how Boulder's budget was well under control? The story then was that the city was going to have to watch expenditures more closely than usual because of the severity of the economic downturn. Now, though, they're talking about shutting down the recreation centers, fire stations, libraries and who knows what else.  There's also the dreaded possibility of "special tax districts" that would raise money to support services and amenities that most taxpayers must have thought they were already paying for in-full. Could this happen where you live?  We hope not, but if Boulder can be blindsided by this kind of news, it could happen anywhere. The town has never struck us as an out-of-control spender, as have other cities in which he have lived, including San Francisco and New York, and budgeting at the state level has always seemed relatively conservative.   Since a significant portion of Boulder's revenues comes from business taxes, shoppers and diners probably bear some of the blame for cutting back on frills. So what's the city to do?  They could try the Obama approach, exhorting consumers to keep spending money they don't have, presumably by borrowing it. Or, as appears more likely, they could cut back on outlays until the budget is back in balance. Too bad Boulder doesn't have the Bernanke option of financing prodigious increases in spending by purchasing its own municipal bonds. Ten million dollars raised this way would probably do a lot more good for the local economy than ten spurious billions would do for the U.S. economy. At least we could see

An aging downside target at ____ looks as compelling as ever, but for today at least, it wouldn't much to turn the hourly chart bullish. Specifically, a pop to _____ would do the trick. That would surpass more than the required two prior peaks needed to create an impulse leg

There are good reasons for not charging enthusiastically into Monday's opening, starting with the failure of Friday's rally to exceed a Hidden Pivot target that I'd drum-rolled in the E-Mini S&P.  There is also an Armstrong cycle date to respect, along with another from Paul Montgomery, a forecaster whose market calls have been described as "eerily accurate" by no less an authority on cycles than Peter Eliades.  In the meantime, we have some modest bearish plays working in Google and Microsoft, but the stock market will have to fall before we can spread off what little risk we have in these two stocks. We also have a bull calendar spread in the Diamonds that has ebbed into slight profitability, but it will need to ripen some before we take a partial profit.  I'll post more touts for the new week Sunday night, after electronic index futures have begun to  trade, so stay tuned!