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COMMENTARY for Monday
TODAY'S ACTION for Monday
Rick's Picks for Monday
Friday’s secondary low at 934.50 occurred just a few ticks from the c-d midpoint of the pattern shown, implying that a breach Sunday night or Monday morning could send the futures down to as low as 924.75. However, that Hidden Pivot is useless for bottom-fishing because of its close proximity to Wednesday’s low. Alternatively — and more likely, in my opinion — is the resumption of the uptrend to a minimum 968.00. That target is shown on the chart as well, with a pattern begun from 903.50 a week ago. It will remain valid as long as the point ‘C’, last Wednesday’s low at 922.50, is not exceeded to the downside. _______ UPDATE (1:07 p.m.): After a very brief flurry of short-covering on the opening, weakness has dominated. As of mid-session, the low so far has been 925.50 — three ticks above our 924.75 downside target.
Goldman’s $10 short-squeeze on Thursday/Friday topped at exactly 151.25, a single penny above where we’d expected. Since some subscribers are likely to have laid out shorts at the 121.24 target I’d drum-rolled, I’ll establish a 400-share tracking position. Because the pullback so far has gone as low as 148.75, partial profit-taking was most definitely in order. I’ll assume 200 shares were covered at 150.00, giving us a profit-adjusted cost basis of 152.49 for the 200 short shares that remain. For now, tie them to a stop-loss at 150.51. _______ UPDATE (9:55 a.m.): Cover an additional 100 shares now, with the stock trading for around 146.60. That will leave us short 100 shares with a profit-adjusted cost basis of 157.13. For today, use a stop-loss for the remaining round lot at 149.97.
Conventional support down near 945.00 will likely turn magnetic if the futures take out Friday’s lows. The actual bottom at 953.80 was a single tick from the target shown in the chart. Considering it took the August contract two days to make its way down to the pivot, the so-far modest bounce must be judged disappointing. If the bounce continues, there are no peak-lets along the steep wall of Friday’s decline that we could use for handholds to get on board. Under the circumstances, we’ll have to settle for a move above Friday’s 966.00 recovery peak to signal a possible turnaround, but it looks too obvious to afford us any edge.
We’ve been using a HiddenPivot at 112^09 as a minimum downside objective, but I’m going to lower it to 111^21, a Hidden Pivot that comes from the hourly chart (where A=123^10, on May 21). The midpoint sibling of that target, 115^15, was breached by a full point on Friday, increasing the likelihood that the target itself will be reached, although a two-day close above 115^15 would hint of a reversal. We’ll switch over to the September contract tomorrow, but for your information, the equivalent targets lie respectively at 114^01.5 and 110^07.5.
GDX looks bound for a Hidden Pivot support at 40.03 or lower over the near term. The provenance of this target is shown in the 15-minute chart — and yes, you can bottom-fish there provided you use a tight stop-loss of about 5-7 cents. Like Gold futures, there are no compelling benchmarks we can use to tell whether GDX is turning around. Nevertheless, we can stipulate that this vehicle print 43.34, just above the high of Friday’s gap-down opening, to give us reason to take encouragement. _______ UPDATE (1:15 p.m.): GDX touched a low of 39.85 in the first hour, somewhat exceeding the minimum downside objective proffered above. We should infer that a test of conventional support (in the form of some lows near 36.50 recorded in mid-May) is in the offing, but buyers could regain the initiative immediately with a thrust by mid-week exceeding 42.33. (Note: A two-day close above that number would be even more encouraging).
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
This Just In... for Monday
Peter Schiff hacks his way through a jungle of lies to explain why the Obama Administration’s “charm offensive” to talk up the dollar, and therefore U.S. Treasury paper, cannot possibly succeed over time.
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Sellers Sabotage Gold’s Celebration
by Rick Ackerman on June 8, 2009 12:01 am GMT · 17 comments
The guy in the picture spent the weekend shuffling around the pedestrian mall in Boulder, Colorado, but he should try hanging out in front of the COMEX in New York if he’s serious about buying gold and silver cheap. It was there on Friday that bullion was not merely “unwanted,” but positively despised. Exchange traders couldn’t dump the stuff fast enough, judging from the way prices plummeted early in the session and barely bounced for the remainder of the day. When the dust had settled, August Gold was sitting at 957.50, down 24.80. July Silver got hit nearly twice as hard in percentage terms, diving 64 cents, or 4 percent, to close at 15.25.
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