Wednesday, November 25, 2009

Gold was pounding on resistance pivots with well-nigh irresistible force, so we considered the bigger picture offered by a jerry-rigged Tradestation monthly chart. It showed continuous-contract action going back to 2001 and gave us the wherewithal to project a 150-point rally that is nowhere to be found on the daily chart. We also looked at the E-Mini S&Ps for a camouflage opportunity, but there were none. This served to remind us that opportunities in the micro time frame are worthwhile only if they are in alignment with patterns of a larger degree.

If you shorted on Monday at 115.10 as advised, you were in within 0.02 points of the top. The pullback so far has been shallow but nonetheless sufficient to allow for relaxed profit-taking. Now, I suggest covering all but a small piece of the original position so that you will still have a nice profit if you need to cover what's left above Monday's high.

A longstanding target at 72.93 still looks compelling, although the dollar seems too well controlled at the moment to take the implied dive straightaway.  If there's any official support for the buck at this point, it would become manifest with a pop to  76.00. Failing that, however, we can only infer that the dollar has no sovereign friends willing to put their money where their mouths are.

The futures looked to be developing thrust for a move to as high as 124^02, subject to midpoint resistance at 122^02.  They need only reach 123^09 to trip a buy signal for an even larger bullish pattern that projects to as high as 128^13. That last number is somewhat fanciful at the moment, but there is no mistaking the incipient buying power percolating beneath the surface right now.

Yesterday's gratuitous swoon was practically the mirror image of  Monday's equally gratuitous hump. If the futures get squeezed above this tedium, look for a shortable top at  exactly 1121.25. The midpoint sibling of that Hidden Pivot lies at 1108.25, and so a shallow pullback from just above that number -- 1109.25 or so -- could conceivably be used for a camouflage entry from the long side (see chart).

Gold telegraphed tonight's rally through resistance by an earlier failure to reach the 'd' target of its initial correction and by the shallowness of that correction.  A secondary target at 1185.50 could still contain the rally, and bulls should not break out the bubbly until it is left behind in the dust.  More immediately, as of 1:25 a.m. EST, the futures were just a tad shy of a minor Hidden Pivot at 1178.90, but any progress above it would put the 1185.50 pivot in immediate play.  Here are two other minor pivots where we should expect a pullback that the nimble can trade: 1180.40 and 1199.20

The Wall Street Journal’s op-ed page is probably the only place left in America where Wal-Mart’s predatory pricing model is viewed, without irony, as a good thing. Of course, the Journal doesn’t see it as predatory at all. In the eyes of the newspaper’s piously pro-capitalism editors, Wal-Mart’s everyday low prices are freeing up more disposable income for the working man. And retail space, too, since vendors who can’t cut the mustard in hard times are the first to go when Wal-Mart targets them in its crosshairs. This is creative destruction at its cruel best, and we supposedly should welcome it, since new and better-run businesses are waiting to take the place of those that have failed to meet the needs of the American consumer.     At least, that’s the theory of it. In practice, however, Wal-Mart has decimated Main Street in hundreds of towns across the land. While consumers were enjoying everyday low prices, their neighbors were closing their shops and trying to figure out how to survive. Some did, albeit barely, by going to work for…Wal-Mart. The company’s slash-and-burn jihad across the retail landscape would not have been much noticed in the big cities, nor in such elitist redoubts of capitalism as the Wall Street Journal editorial room. But that’s about to change, since Wal-Mart has trained its heavy guns on booksellers who have long been among the solidest anchor tenants at the street level of downtown shopping districts.  Unbeatable Price for Books  The giant retailer’s shot-across-the-bow – offering the top ten best-sellers for $10 -- came just in time to devastate book stores during the holiday shopping season. Stores of every size will be vulnerable -- from independents who have been savvy enough to survive competition from Amazon, to the largest vendors, including Borders, Barnes & Noble, Target,