Tuesday, November 3, 2009

Could disenchanted Libertarians abandon the Republicans and perhaps find critical mass in a third party -- one that would fill the vacuum created by a collapsed GOP?  This idea is advanced by a Randian, Mike Churchill, in an analysis forwarded to us by our friend Jonathan Auerbach of Auerbach Grayson. Click here to access the full essay.

The 231 target broached here a while back is still viable in theory, although the odds have lengthened a bit with Apple's so far 24-point decline from recent highs. The selloff has done no damage whatsoever to the daily chart, however, even if the hourly has lost the cocky look it had just two weeks ago, before the stock began to fall. Most immediately, a thrust exceeding 198.20 would turn the intradays quite bullish once again, while a print down at 185.54 would likely re-energize sellers.

On the hourly chart, Goldman needs to hit 180.06 to decisively end the so-far 15 percent slide from a 17-month peak at 193.  A minor reversal would  require a mere 173.45, however, and that's where longer-term shorts should ratchet up their attention.  Any microscopic pullback from just above that number would offer great camouflage for a long entry, provided the rally has not come  from too far below.  The opportunity is perhaps best appreciated on the 5-minute chart  (see inset).

The futures were so intemperate and ill-behaved yesterday that there's little point, the night before, in my proffering a number to trade on.  They looked bound for 1016.25 most of the day (or 1012.75 if any lower), but the counterswings were too violent to give play to the targets, and even seekers of camouflage would have been challenged to find a safe entry spot. Today, it would take a thrust to 1070 -- a tick above last Tuesday's high -- to turn the hourly chart decisively bullish.

Silver's two rallies over the last few days have been failures from a HiddenPivot standpoint, since neither created an impulse leg on the hourly chart.  However, the futures have a chance to make up for it with the relatively short thrust it would take to surpass the 16.885 peaklet along the wall of last week's decline. That's just 26 cents above the current price, so the implied breakout -- and make no mistake, that's what it would be -- lies comfortably within a day's reach.

It's all just noise until bulls challenge the status quo with a push above of October's peaks, which range from 1068.80 to 1072.00.  My immediate target is still 1111.90, signaled, presumably, by a close above the target's midpoint sibling, 1069.40. Intraday swings have been too wide to board haphazardly, but you should consider using point-X entries that trigger after a second 'C' is formed and all of the overly eager have been stopped out. Such patterns appear to have worked nicely yesterday. _____  UPDATE (1:47 p.m.):  The futures appear to have topped for the day at exactly 1087.00, a Hidden Pivot target flagged during Tuesday morning's impromptu webinar.  That leaves 1111.90 as the next logical stop, although we'll want to pay close attention to any correective patterns that develop in the meantime.

Stocks took a rollercoaster ride yesterday – not because traders were racked with uncertainty, but because the mysterious cyclical forces that drive the markets evidently are not quite ready to capitulate in favor of bears.  That will happen soon enough, we think, but in the meantime there was bound to be some squabbling between shorts positioned to benefit from a downturn and portfolio managers keen on distributing as much stock as possible before They pull the plug.  That’s how it works, and if you think it is “hopeful” investors that drive shares higher, you should avoid anyone who approaches you with a solid-gold brick or a “good-faith” envelope filled with money.            Concerning the rollercoaster ride, we doubt that anyone could be even mildly uncertain at this point about what the foreseeable future holds for the U.S. economy. All the indicators that matter are pointing down, aren’t they? Oh, right. There’s that price blip in the housing sector.  Chalk it up to marginally qualified buyers driving the low end of the market with FHA (read, "subprime") loans and an $8000 tax credit. That might continue for a while, incidentally, since our elected representatives are talking about extending the credit till who-knows-when. There have been reports of widespread fraud in connection with this giveaway, but that wouldn’t trouble any of the Keynesians in Congress, since the good Lord’s supposedly great idea was to put as much money into circulation as possible -- and who cares whether it has been honestly earned or wisely spent.  Blast Survivors  Meanwhile, we give The Real Estate Roundtable credit for not trying to put too much lipstick on their pig. In fact, Roundtable evidently sees no end to the depression-like conditions developing in the U.S. commercial real estate market. Even though sentiment indicators