Tuesday, July 7, 2009

This morning the markets are mixed.  The Asian markets are down and the European markets are up.  The E-mini is down a bit before the open which should have the Dow down between 10 and 20 points on the open.  Gold and oil are up a little along with the majority of the other commodities.  The exceptions are cotton and lumber at this time.  It appears that world waits for the second quarter earnings reports which starts tomorrow.  The big question is the US Dollar. (Ira)

Most signs point lower, but the value of any bearish Hidden Pivot targets I could provide is overshadowed by some visually compelling supports associated with prior lows. The most obvious of them lies at 60.30, recorded in late May, so we'll use that as our minimum downside target for the near term. Any lower and the futures would likely find themselves groping their way down to 57.57 in search of traction. That price is equal to an important low recorded in mid-May. (RA)

The $12 downside target in today's commentary is vague, but we can calculate a precise target at 12.395 using the hourly chart and, for point 'A',  a peak at  15.575 recorded on June 11. That should be regarded as a minimum downside objective for the next 4-7 days, and although a tradable bounce should be expected, some visually obvious supports down near 12 are likely to exert strong magnetism. (RA)

There is a hidden pivot support area at 30.80 which Caterpillar tried to reach Monday.  Below it, the next support areas are 26.65 and 26.42.  A rally attempt would encounter crucial resistance at 35.80, but above that number the next Hidden Pivot resistance lies at 40.63.   Most immediately, there are lesser impediments at 31.93 and 32.11  (IT) Update: It appears that there should be some support for price at 30.20 and then 28.45.  For price to start a retracement higher it would ahve to go through 31.30.  Max Pain: 35

We told you last week to wait for better prices if you're planning on buying gold bullion. That is still the case, although it looks like it may not be long before the promised bargains arrive.  A week ago, with Comex August Gold trading for around 824, we projected a minimum downside target of 899; yesterday the futures settled at 924.60 after making a two-week  low at 920.30 . Lest you get the impression that gold sat still in the interim, we should mention that buyers goosed it as high as 947 last Wednesday. The rally looked like a fake, though, and we warned subscribers not to chase it. But the current bout of selling looks more convincing, and that is why we are telling you to wait for lower prices before doing any serious accumulating.   How far might gold conceivably fall over the next few weeks? As far as boredom dares to push it, we'd guess. However, we see no real urgency in the selling right now, only a tendency by some investors to lighten up out of impatience. Nor is it gold's recalcitrance per se has tested investors' patience; rather, many have grown bored with the bear rally in stocks that has temporarily sucked the life from the precious metals sector. For, as long as stocks remain buoyant, it will tend to distract investors from the gathering financial storm that seems destined to push precious-metal quotes to new all-time highs. For your information, and no matter how bored investors become, we doubt that August gold could go much lower than 882 over the near term. And even if it did, the long-term charts would remain a picture of health all the way down to 810.  Silver More Vulnerable Silver looks somewhat more vulnerable, at least in percentage terms.

The bonds are in limbo right now. On the daily chart price would have to go through ____ and then P would be _____. For the up move to continue price would have to go through _____ and then the P would be _____ and the longer cycle price objectives remain the same as yesterday. There is still downside pressure being applied to the charts and the 119-04 level continues to act as resistance. The night session could carry price down to the _____ with a D of _____

As noted in today's commentary, we should set the bar at _____ to avoid a false bullish signal.  A thrust touching that number would turn the daily chart bullish, most convincingly so if the rally leg doesn't correct for more than a day after exceeding the lower peak at _____ (#1) shown in the chart. The bearish scenario should be equally straightforward:  a test of lows made in April, respectively, near 880 and/or 960.  More immediately, the first hint of a potentially bullish turn would come today at _____. That would create a promising impulse leg on the hourly chart. 

Over the week end I went through about 40 stocks and they all had downside pressure and looked like they were about to break to the downside.  Each chart replicated the Dow and S&P charts.  Each of the stocks surveyed has had five years of solid earnings with excellent return on equity.  They were all blue chip stocks and stocks that one would want to own with a rising stock market.   There are certain things that should be noted before I list some of the stocks I looked at.  Second quarter earnings start on Wednesday with Alcoa (AA).   The other thing I noted in various publications is that the S&P earnings are the lowest its been in over 50 years.  That is after an adjustment for inflation.  On the chart that I saw this years earnings were a vertical black line straight down.   As long as analysts keep low balling earnings projections you will keep getting these flurries of upside action.   Here are a few of the stocks that I looked at: Abbott Labs (ABT), Apogee (APOG), Emerson (EMR), Johnson and Johnson (JNJ), Paychex (PAYX), Proctor and Gamble (PG) and Exxon Mobile (XON) are a few that I checked.

The E-mini did what it was supposed to do today. It closed the opening gap in accordance with classic technical analysis theory. There is still downside pressure being applied to the daily chart. If you look at the chart you will find lines in 3 different collors. They define price action on three different price cycles. The red lines show a long cycle that is still in a down move with one price objective acting as resistance. The black line is an intermediate cycle showing that there are still upside targets for the retracement up without voiding the long term down move. The blue lines are the short cycle that shows my price objective 2 along with the target for the move down, your D. The price levels are noted on the chart. After this rally that closed the opening gap, price would have to go through ___ in order to restart the move down. Your P level would be ____. ____ is the second price objective and it should act as temporary resistance for a move higher. The target, D, for this move up is currently ____.