Tuesday, June 2, 2009

We should be doubly diligent when a trading vehicle appears to obliterate an important Hidden Pivot target, since we don't want to be caught unawares by an important turn that comes from the "wrong" place. In this instance, subtle but potentially meaningful signs of strength would come on a thrust exceeding _____ today. That would surpass a peak made on yesterday's head-fake opening, turning the hourly chart bullish in the process. If DXY move lower in line with expectations, however, the first Hidden Pivot support of significance that it will encounter lies at ____, just 0.03 points above ____ key low. There are therefore two important supports at that level, implying that a breach in one fell swoop would be quite bearish.

As you can see in the accompanying chart, Goldman was just marking time yesterday, presumably setting the hook for any bears who may have taken comfort in the stock's laggardliness. Not a single prior low was breached by the $4 selloff, and the stock went bounding into the close.  Concerning the 151.24 rally target mentioned in today's commentary, the slightly adjusted, correct target is ____. I've included a chart that shows its provenance for anyone needing to be convinced. The Hidden Pivot midpoint of the pattern is _____, so any pullback to that price today or tomorrow should be viewed as a buying opportunity. Incidentally, if Goldman makes short work of _____, it would become a good bet to run an additional 5 points to _____, the target of a larger pattern also shown in the chart.

With GM's bankruptcy no longer hanging over Wall Street, perhaps now investors can get their minds right for some really bad news. We're talking about the looming bankruptcy of California, of course, and of at least a few more big-budget states whose books are in equally disastrous shape, including New York, Arizona, New Jersey, Nevada, Rhode Island and Florida. All told, the 50 states are looking at budget shortfalls totaling $350 billion over the next two-and-a-half years, according to the Center on Budget and Policy Priorities. A disaster is taking shape before our eyes, although you'd never know it from all the celebrating that's been going on in the stock market. Consider these sobering statistics from the Rockefeller Institute. They were cited by our colleague Bill Buckler of The Privateer, one of our favorite reads : "[With California leading the pack,] state tax collections continued to fall in the first quarter as muted consumption, falling incomes and weak profits plunged the states into a deeper fiscal hole," writes Buckler. "The 47 states that have reported first-quarter revenues saw total tax collections fall 12.6 percent compared with the first three months of 2008. The steepest drops were in income taxes due to climbing unemployment. Corporate taxes declined 16.2 percent in the latest quarter, reflecting weaker profits. Personal income taxes fell 15.8 percent. Sales taxes were down 7.6 percent. Forty-five of the 47 states saw revenues decline." "Stage Three Deflation" As Buckler notes, California's fiscal problems are deep and wide. In the coming weeks, he writes, the state faces "park closures, massive welfare cuts and sales of public buildings and land." At the end of the line looms what he calls "stage three deflation" for the state's economy, implying a complete collapse of income, jobs and economic activity. This is a very

The 68.05 target broached here yesterday was tradable, although not with a stop-loss as tight as the 21-cent out I'd advised. The target more or less contained the move for most of the day, but the futures were bounding higher at the bell, threatening to ring shorts' necks yet again on Tuesday. If so, buyers are likely to face at least some resistance in the form of a minor Hidden Pivot resistance at ____ (see chart).  It looks too delicate to use for shorting, but if it shows no stopping power whatsoever, that would strongly suggest crude is going to make $70 easily on this run.

We hold four September 10- June 10 calendar spread for a net credit  of 0.10, a position that cannot lose and which has the potential to produce a gain of around $500. We are also bidding 0.25 for four ____ calls in order to build more edge into our position across a wider range of prices.  Continue to bid 0.25 for the calls today, but step up to a 0.30 on the opening.  The stock looks like it needs to consolidate for at least another day or two before its next leap. By exceeding a Hidden Pivot resistance yesterday at 10.72 (30m chart, where A=7.07), Silver Wheaton shortened the odds of another bullish thrust.

The futures sold off hard after making their high early in the day -- but then, when haven't they done so?  The important thing is that buyers had no trouble pushing the August contract past a Hidden Pivot resistance at 985.80 noted here earlier. Night owls should put a stink bid in at 970.60 stop 969.90 and keep your fingers crossed. If the futures move higher without deferring to our niggardly effort, use a pullback that begins from between peaks 1 and 2 for "camouflaged" entry. _______ UPDATE: Sweeeet. The stink bid worked rather nicely, since August Gold touched a low of 970.50 overnight (i.e., 4 a.m. EDT)  before uncorking a nearly $18 rally to a so far high this morning of 988.30.