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COMMENTARY for Tuesday
TODAY'S ACTION for Tuesday
Rick's Picks for Tuesday
Is this the start of a big correction in gold? I have my doubts, although we shouldn’t fail to notice that a search for conventional support could take the December contract down to lows in the $980s made in late September/early October. Mining stocks would get hit harder, of course, but that’s not telling you anything you did not know already. We’ll have a better idea about how bad the damage is likely to be once we see how the impulse leg from yesterday’s high plays out on the hourly chart. So far, however, there is not even a ‘b-c’ correction to work with. _______ UPDATE (1:45 p.m. EDT): Moving with a raggedy kind of nastiness, the downtrend has found tentative support within two ticks of a Hidden Pivot midpoint at 1032.50. (A=1060.80, from the hourly chart, 10/26.) The actual low is above the midpoint, and that is mildly encouraging, but if it is decisively breached — say, by 0.60 points or more — you could infer that the selling will continue down to at least 1020.70, the ‘D’ target associated with the midpoint. A close beneath 1032.50 would likely clinch the climactic selloff.
The futures came down to within a few pennies of a 17.160 target derived from last Wednesday’s high. They looked bound for still lower prices at the close, but we’ll need to see a little more of the ‘b-c’ follow-through leg before we can confidently assess sellers’ conviction. Hidden Pivots aside, the trendline in the accompanying chart suggests that lows in the $14-$15 range are hardly inconceivable if the steeper trendline breaks.
Allowing for the fact that crude is in a bear rally and not a bull market, its daily chart looks less threatened by yesterday’s selloff than either gold or silver. For one, last week’s high at 81.99 decisively exceeded an 80.21 target. And for two, the rally exceeded some key “external peaks” before taking a breather. This may have negative implications for motorists, but it is an incipient plus for bullion prices.
We should be skeptical of any rally in the broad averages that is not led by a leaping, bounding, shamelessly unmitigated, hairy-kuckled Goldman Sachs. This was obviously the case yesterday morning, when Goldman could muster a rally of only 2.45 points in the early going before diving for the mat. Traders can try tightly stopped bottom-fishing today at 176.42, but if that Hidden Pivot gives way, look for the selling to continue at least 173.11.
Sellers easily crushed a textbook Hidden Pivot support at 1067.00 yesterday, suggesting that things are likely to get worse before they get better. There are no downside targets remaining on the hourly chart, but if you’re short to begin with (or if you’d like to get long with camouflage), a 1072.50 stop-loss may work. That’s a tick above the second of two external peaks whose breach, if the rally does not pause between them, would create a bullish impulse leg on the one-minute chart (shown).
Your guess is as good as mine concerning DXY’s next feint, but there is no doubting the bullish impulsiveness of yesterday’s thrust. It cleared no fewer than three daunting “external” peaks, and that’s why we should infer that this rally, finally, is the real McCoy. (But we’ll nonetheless continue to verify each step of the way, since the dollar, after all, is still fundamentally worthless — a form of debt, not money.)
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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.
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What Kind of World Sees the Dollar as ‘Safe’?
by Rick Ackerman on October 27, 2009 12:53 am GMT · 7 comments
With gold getting whacked hard yesterday, it was a time for sober reflection in the gold-obsessed Rick’s Picks chat room. A trader who goes by the handle “Padre” saw “the Jungian collective unconscious” at work. We would take a less kindly view, more Freudian, that saw only id and ego in a state of gratuitous conflict. But we’d be the first to admit that it can be far worse when these forces are aligned; for only then can they produce something as irresistibly corrosive as…money. How so? Well, if you saw the classic sci-fi film Forbidden Planet, you may recall that the Krell civilization, using an infinitely powerful fusion reactor, built a machine that could conjure up all of their needs when ordered to do so telepathically. Unfortunately, while they slept the reactor conjured up monsters from their primitive subconscious (see photo below), and that was what ultimately did them in. » Read the full article