Tuesday, June 23, 2009

I expect sellers to push the Gold Miners ETF down to at least 34.10 before it turns around. If the opportunity arises, we'll attempt bottom-fishing there.

If the futures close beneath a midpoint Hidden Pivot support at 1.3792, my minimum downside objective for the near term, look for the selling to continue to at least 1.3577.

There's a subtle but promising Hidden Pivot support at 13.260 where you could try bottom-fishing today with a stop-loss as tight as three ticks. That number can serve as a mininum downside objective  for the near term, but if it's decisively breached brace for more slippage over the near term to as low as 12.790.

With gold futures approaching a tradable turn, we can try bottom-fishing in this vehicle by bidding 3.10 for _____ calls.  That would be an attractive price if the stock dips down to _____, a Hidden Pivot support, before turning around.  You can pay a 0.10 to 0.15 more if the calls are out of reach.

The futures have fallen to within $2 of the _____ pivot we were using as a minimum downside objective for the short term, but in off-hours trading Monday night they appeared capable of pushing the support aside and continuing down to ____.  I'll recommend bottom-fishing there with a minimum 0.40 stop-loss, but if it's hit we should infer more downside to at least _____, a Hidden Pivot that can also be bottom-fished with a very tight stop-loss. Both targets are shown in the accompanying chart.

In after-hours trading the futures were stalled at midpoint resistance, _____.  If they get past it, however, a Hidden Pivot at ____ would be in play, and with it the potential to kick the hourly chart into high gear.  Please note that a rally achieving _____ would have exceeded a total of three prior peaks, including two "externals," signaling a move of at least three to four weeks' duration. Once above _____, a path would be open to around _____.

The _____ downside target given here yesterday is still valid, although I prefer the lower Hidden Pivot at 869.50 given in today;s commentary as as place to try bottom-fishing. An _____ stop-loss is suggested. Alternatively, the futures would need to pop to _____to turn the lesser charts bullish.

A few more days like yesterday, and bears could be pardoned for feeling a little cocky.  By simply keeping their cool Sunday night, they left DaBoyz with precious little buying power when stocks began to trade Monday morning. The result was a 200-point decline to start the week. That's even worse than last Monday's step-step-stumble out of the gate, which primed the Dow Industrials for a 187-point decline that day. The mood on Wall Street has definitely changed, and nowhere is this more evident than in the failure of the world-class predators who work the Sunday-night shift to spook those who went home short on Friday into covering. Actually, Friday itself had been a bust, since even at the apogee of the head-fake that played out in the opening hour, buyers couldn't push the broad averages above even a single prior peak on the hourly charts.   As we like to point out, merely bullish buying can almost never create headline rallies; rather, it takes the kind of urgent buying that only shorts who have gotten caught in the ringer can provide. While it is true that legit, die-hard bulls lend moderate buoyancy to the markets at all times, it is only desperate bears on margin calls who can  punch through supply zones and create opening-hour gaps in places where sellers might otherwise have been more aggressive about profit-taking. Bottom line: Bull markets (and bear rallies such as the one we've been in since early March) owe far more to skeptics, doubters and permabears than to business-show shills who are constantly talking up the market. A Tough Week Ahead... So where do we see stocks headed this week? For starters, the E-Mini S&P looks likely to fall an additional 20 points, at least, when stocks start to trade again Tuesday morning.