The Hidden Pivot target at 910.30 stopped yesterday’s rally cold, but the weak selloffthat has followed hints that Gold is about to get second wind. There is no mistaking the importance of the 911.80 high that the June futures will need to surpass in order to turbocharge the hourly chart, and any progress above it, particularly a weekly close above it, would be very good news for gold bulls. Rather than speculate any further, we’ll let the action dictate the outlook. Most immediately, though, the futures looked primed for a thrust to 920.10, subject to resistance from its sibling midpoint, 911.20. If buyers can push past that midpoint, the 911.80 resistance will be a dead duck. FYI, there are no compelling Hidden Pivots we can use to project a downside target, but 894.90 seems logical, since it represents a 50% retracement of the rally leg begun from 879.50 on April 21.
From the monthly archives:
April 2009
The downside target I identified in today’s commentary is shown in the chart, with an AB impulse leg that looks pretty kosher. The actual target lies at 809.75, and it sibling midpoint at 834.25 has already been breached. Even so, and as you can see, it wouldn’t take much of a rally to negate the point ‘C’ high of the downtrend. Given Microsoft’s short-squeeze reaction to the non-news after the close concerning earnings, it’s hard to predict what the market’s mood will be when stocks begin to trade on Friday. If the E-Mini S&P heads higher, though, and it looks comfortably supported by an 858.00 midpoint (currently resistance), we should infer more upside potential over the near term to as high as 892.75.
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Silver Wheaton topped a list of precious-metal buy recommendations sent out a few days ago by George Carson, a New Zealand forecaster using a technical system that he says has produced no bad signals going back two years. The “buy” was generated on April 17, but so far SLW seems reluctant to oblige. Indeed, by my runes, the stock looks vulnerable over the near-term to a fall to 6.63, a Hidden Pivot that lies about nine percent below these levels. If this occurs, I’ll recommend buying 200 shares, no stop.
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We hold the Sep 84-May 84 calendar spread four times for 3.45. It is a conservative bullish play, but there is growing downside exposure that we should take steps to neutralize. Accordingly, I’ll suggest bidding 1.62 for a single May 76 put DUQX) on the opening. If the order goes unfilled, lower the bid to 1.46 and leave it in for the remainder of the session. Check back after the opening, since we may need to adjust on-the-fly. _______ UPDATE: (7:04 a.m. EDT): Assuming stocks don’t give up much of their predawn gains, I estimate that the May 76 puts will open for around 1.47. Let’s bid 1.51 for them, since we’ll get a lower price anyway if the market makers believe they can steal them for less on the opening rotation. Check this bid price five minutes before the opening, since I may lower it again.
At yesterday’s close the futures looked poised for a thrust to at least 910.30, a Hidden Pivot, but they’ll need to push just a tad higher, to 911.80, to revitalize the bull trend begun from 865 three days ago. That wouldn’t negate an 845.20 target we’ve been using as a potentially important correction low, but it would alter the odds significantly in bulls’ favor.
The bear rally has assumed the demeanor of Mr. Hyde at the moment, not so much unpredictable as too skittish to frame calmly in one’s crosshairs. Even so, we should expect the death dive begun in the final hour of yesterday’s session to reach 809.75 if it trashes that Hidden Pivot’s midpoint sibling at 834.25 Wednesday night. So far, shortly before 11 p.m. EDT, the low was 833.00 — probably sufficient for us to infer that lower prices are coming. If so, you can bottom-fish at 809.75 with a stop-loss as tight as 1.00 point. _______ UPDATE (7:00 a.m. EDT): The futures went no lower than 833.00 overnight and were actually up as much as ten points in a short squeeze aggravated by Credit Suisse’s positive earnings report. The lies and self-deceptions associated with this news are so thick as to cast a fatal pall over any rally, but we will short it gingerly nonetheless, since applying logic aggressively is just looking for trouble.
Gold, Crude Oil Hit Their Marks
by Rick Ackerman on April 24, 2009 12:01 am GMT · 3 comments
Yesterday’s trade recommendations scored two dead-center bullseyes, each calling a rally top within a single tick. In Gold, we were looking for the June Comex contract to leap sharply to 910.30. When the dust had settled, the futures had traded as high as 910.40, the peak of an $18 rally. Although the high fell just shy of the 911.90 print needed to refresh the bullish trend, it seemed a foregone conclusion the futures would get there, and soon, since they were maintaining altitude in after-hours trading following a weak pullback from the intraday peak. Comex Junes were an opportune short sale for day traders glued to the 910.30 target; now, however, if they continue rising to at least 911.90 as we expect, bears had better run for cover. A more detailed forecast appears in tonight’s touts section, so check it out. » Read the full article