November 2009

From a Hidden Pivot perspective, Silver's vital signs remain weaker than Gold's. Even so, bottom-fishing at 18.275 can be tried if 18.540 (aka point 'C') has not been exceeded to the upside first.  That's a Hidden Pivot midpoint, and if it's breached it would open a path down to as low as 18.015.

The target provided in the Mini-Dow for bottom-fishing could prove to be useful analytically as well, since its breach would open path to another 63 points of downside.

I was unable to work up much enthusiasm for bottom-fishing in the E-Mini S&P, but this vehicle looks somewhat more appealing, since a midpoint support at 10269 occurs, so to speak, in the middle of nowhere.  You can bottom-fish via a 10271 bid, stop 10264, good till noon EST. ______ UPDATE (1:27 p.m.): This is the sloppiest action I can recall, going back months  -- a market adrift.  The expected bounce from 10269 lasted all of five minutes, stopping out longs with a $70 trading loss.

The futures had a fabulous chance to fall apart yesterday, since they were weaker than we've seem them on any day since Halloween. Instead, on the hourly chart, the weakness could not penetrate even a single prior low "along the wall" of the last rally. This suggests to me that although there is not enough buying power to move the S&Ps to the next rally target (1132.25), there is even less enthusiasm for hard selling. Friday nuttiness could change this dynamic, but bulls needn't stir from their sleep unless 1102.25 is exceeded. To the downside, 1073.75 is still where trouble begins. There's a midpoint support on the way down at 1087.75 (D=1080.25), but it looks too close to some prior lows to be of value for bottom-fishing.

December Gold appeared to be struggling Thursday night to seize the advantage afforded by its breach of a midpoint resistance at 1142.80.  The sibling target is 1155.60, and we should therefore use that Hidden Pivot as a minimum rally objective for the near term. Alternatively, a dip below 1125.2o today -- unexpected at the moment, based on the technical evidence -- would turn the hourly chart bearish.

Despite the bearish rant in today's commentary, the stock was in a minor uptrend projecting to 173.82 at the cl0se, provided it can get past a lesser resistance at 172.69. I'd suggest shorting any 'D' rally target on the 15-minute chart with a very tight stop, however, since the stock looks like it's no longer easily capable of inflicting much pain on bears.

In a moment, I’ll get to the deadness of Goldman shares and the fatal implications this may hold for U.S. stocks. But first let me share with you a link to “The Day the Dollar Died,” an extraordinary (and scary) script for a day that is probably coming. The author is a blogger named John Galt, and he has described in detail what will happen when the dollar collapses. Readers of these commentaries will know that we expect this to happen in mere hours, not weeks or months.  Galt’s scenario, as the title suggests, plays out so swiftly that no one has a chance to react.  The good news is that he has implicitly provided some excellent defensive strategies for those who would take steps now to protect themselves against economic calamity. For one, he sees the stock markets and currencies of resource-based economies such as New Zealand’s and Australia’s taking off when investors scramble to convert their dollars into anything with tangible value.  Obviously, this will be impossible when it suddenly dawns on the world that the U.S. dollar is just a phony IOU. This is irrefutably true now, as most of you already know, but the fact that only a relatively few have acted on it so far suggests there is still a last-ditch opportunity to get one’s house in order.  The Top Is In  Concerning Goldman shares, I’ve advertised the stock not merely as a stock-market bellwether, but as THE bellwether for the bear rally begun on March 9.  Now, because Goldman has probably topped out, it seems unlikely that the broad averages will make much headway from this point forward.  I’ve reproduced a chart of Goldman above that shows how heavy the stock has become since hitting a recovery high of 190.40 in mid-October. I expect this

Yesterday's thrust topped within less than a point of the 488.79 target flagged here earlier, so long-term bulls should exercise caution at these levels.  There is still room for a second-wind burst over the near term to as high as 499.58, but because the move would max out the hourly chart, anyone who sticks around looking for more would be exposed to serious jeopardy.

The note concerning Goldman in today's ES tout bears repeating, to wit:  This market is going nowhere unless Goldman and its unsavory ilk can lead it higher. The daily chart has been looking too weighty to suggest that any such thing is imminent, but we'll have a chance to test this theory when the stock pulls back to 171.63, the nearest midpoint support of consequence.  You can bottom-fish there with a stop-loss suited to taste, but if it's hit look for the weakness to continue down to as low as 161.84. ______ UPDATE (3:05 p.m. EST):  The recommended trade was an easy winner no matter what kind of stop-loss you used, since Goldman bounced $1.09 after bottoming just seven cents below my target.  It has since come back down, with the very bearish implications noted above if the pivot should fail.