Friday, September 25, 2009

Relief may be near in the form of a Hidden Pivot support at 389.22, but it would be bearish, at least for the short term, if that number fails to hold.

Applying Lindsay's rules straightforwardly, December Silver is entitled to a pullback into the range 15.120-16.645 before it embarks on another leg up.  The resumption of the bullish trend would be signaled by a booster-stage rally of at least _____ starting from anywhere within the given range.  The potential  for the move, measured from the low, would be ____.

Goldman's clawback propensity yesterday was fearsome, especially when you consider how very badly the stock needs to correct a 15-day run. If it pokes its greasy little snout above 185.60 today, bears had better be prepared to throw in the towel.

The corrective rally Thursday night promised to deliver no more than _____ -- and that was only if the Hidden Pivot's midpoint sibling at 997.30 is exceeded. Promises sometimes get broken, though, and we should take it as a bullish sign if it happens here. However, it would take nothing less than _____ to turn the lesser intraday charts decisively bullish. If we study Thursday's tumult from the top of the 5-minute chart on down, we find a Hidden Pivot at _____ that can serve as a worst-case target for the near term.  And as always, price action at the ______ midpoint pivot will tell us whether our coordinates are the right ones.

Yesterday's inebriated swan dive came within two ticks of a two-day downtrend's Day-Glo target (1040.50) on the hourly chart. The futures should go no lower than that Hidden Pivot support if bulls are to maintain the appearance of being in charge.  however, if they do slip lower, I'd put pivotry aside and use the 1025.50 low from August 13 as a minimum downside objective. Alternatively, a print at _____ Thursday night or early Friday morning would turn the one-minute chart bullish. 

It’s a crazy world that views dollars and Treasury paper, of all things, as a safe haven whenever the financial news turns unsettling.  Yesterday’s upsetting story had sales of existing homes falling by 2.7% last month, darkening the mirage of recovery in the housing sector. Home sales had risen over the four previous months, but the distress buying that was driving this statistic appears to be drying up. Skittish traders lost no time connecting the dots, dumping gold and piling into dollar assets.  They evidently had concluded – correctly, in our opinion -- that the supposed recovery of the broad economy is in jeopardy if housing sales are already starting to fade even with all of the artificial incentives that have been put into place to goose the real estate market. But why should that make them want to ditch their gold?  Considering that dollars are in promiscuous supply, furnished by the Federal Reserve at interest rates approaching zero, we have trouble understanding why traders would panic to exchange bullion for Treasury debt and dollars (which, need we remind you, are themselves IOUs, not money).  The traders might as well have gotten themselves rescued by the Titanic two thousand miles out of Southampton.   In any event, by day’s end the inscrutable wizards of Wall Street had caused minor, albeit real, damage to Comex Gold’s daily chart.  Notice how the downward spike exceeded two prior lows without a pause.  That meets our criterion for a bearish “impulse leg,” and although gold quotes must now do a couple more uncouth things to demonstrate that the selling is serious, the price action thus far has gotten our attention.  Indeed, we’d grown so complacent about gold’s ability to surf the waves above $1000 that we didn’t even put out a forecast for Thursday.  While we