We set emprical benchmarks because our instincts are so often emotional and therefore unreliable. The benchmark we used yesterday served us well, since it warned that a promising-looking rally was not what it appeared to be. Indeed, after a sharp surge early in the session the futures retreated sharply, giving up most of the day’s gains. The action left a less promising but still buoyant outlook that could power the futures to as high as 949.10 today if bulls gain the upper hand. The pattern is shown in the accompanying chart, and its fulfillment is predicated on a decisive move past the target’s midpoint sibling, 938.30.
From the monthly archives:
June 2009
The gratuitous hump formed by yesterday’s price action disrupted the flow of the downtrend begun two weeks ago, but because it did not breach the point ‘C’ of the pattern, an 869.50 target flagged here earlier remains valid. We should continue to use it as a minimum downside objective, but our bearishness would have to yield to any rally that exceeds a small peak at 910.50 recorded Monday on the way down.
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Yesterday’s seemingly impressive burst didn’t even achieve impulsive status on the 15-minute chart. I’ll be a believer if GDX gets past a small peak at 39.24 made a week ago on the way down.
Little stuff Tuesday night pointed no higher than 14.100. Failing that, a drop into the high $12s awaits. It would take a print at 14.460 to turn the hourly chart bullish.
If the pullback from yesterday’s peak at 69.68 reverses from 66.90 or higher, the rally has the potential to go as high as 71.
A swoon to 34.58 would present a buying opportunity, tightly stopped, since that is a Hidden Pivot support that looks likely to reverse the trend.
Yesterday’s powerful turn from above our target has very bullish implications for the near term, but the futures will still need to get past a key Hidden Pivot midpoint at 1.4175 to prove their mettle. A two-day close above that number would imply additional upside potential to as high as 1.4613. _______ UPDATE (3:05 p.m.): The futures made it only to 1.4133 before collapsing to wipe out nearly all of the previous day’s gains. Once again, a coldly mechanical reading of the charts spared us any emotional investment in the rally.
The futures struggled in vain yesterday to notch a recovery high above the 928.50 threshold I posted intraday in the chat room. That leaves us still looking for a possible swing low at 907.30; or if any lower, 903.80. Alternatively, if bulls are going to turn this vehicle around, it will take nothing less than a print at 945.10 by no later than Thursday to do the job. _______ UPDATE (3:00 p.m.): The futures spiked to 944.40, then detumesced almost as swiftly, falling $17 so far. We did not get caught in this bull trap, however, because the seemingly impresssive rally failed by 0.70 to reach our bullish trigger price at 945.10.
