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COMMENTARY for Friday
TODAY'S ACTION for Friday
Rick's Picks for Friday
In the histrionics of the last few days, gold has shown no great eagerness to decisively reverse the correction from early December’s high. While it is true that Wednesday’s sharp rally created a bullish impulse leg on the intraday charts, the follow-through has been less than inspiring. Let’s set the bar at 1148.10 for now so that we don’t mistake mere noise for a potentially meaningful resurgence. The rally could chop around as much as it likes, but once it crosses the starting line at 1128.70, the thrust would have to carry, unpaused, past 1148.00. In the meantime, we’ll monitor the corrective pattern in the chart closely, since incipient strength would presumably be telegraphed by a turn from the midpoint pivot shown, or from somewhere above it. The pattern is hypothetical at the moment, since ‘C’ might not survive the night.
Silver has lagged Gold since the February 5 bottom and is now in a nascent corrective pattern that could yield a low-risk buying opportunity at 15.180. This is a Hidden Pivot midpoint, and its provenance is shown in the accompanying chart. Bids should be placed at 15.185, stop 15.170, good through Monday.
Some chartists like to work ABCD patterns in the manner shown — and so shall we for once, although I’d suggest using the ‘D’ target analytically rather than for bottom-fishing. Other potential swing lows for today lie at 1083.50 and 1077.75. Those numbers represent, respectively, a 50% retracement, and a 61.8% retracement, of the rally cycle begun on February 12 from 1060.00.
Just a little more upside will max out a pattern begun on Feb 3 from 78.68. The Hidden Pivot lies at 81.56, just 0.26 points above yesterday’s spike high, and it can serve as our minimum upside projection for the near term. A decisive move through it intraday, or a close above it, would be hinting of more upside over the near term to as high as 83.33. That’s the C-D midpoint of a pattern that looks compelling on the weekly chart.
Let’s roll our covered write into March, shorting the March 17-February 17 call spread for 0.40 or better. We currently hold 800 shares with a cost basis of 12.55 against eight February 17 calls shorted for 0.40. They can be covered for 0.01-0.02, but I’d suggest shorting the March calls first, since there is little risk of the Febs running away. Check with your broker before doing so, though, since, technically speaking, it would leave you naked short calls intraday.
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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.
This Just In... for Friday
Is the Fed clever enough to engineer a $1.5 trillion bailout of Fannie/Freddie without a Congressional vote? You bet. Read how in this fascinating analysis from Hussman Funds.
My friend Larry Amernick’s “Trinity Indicator” has just turned bearish on stocks: “The Fed’s announcement comes at an important technical juncture,” writes Larry. “The recent bounce from the 9% correction sent the market into overbought territory and fired off a short-term sell signal from the “Trinity Indicator.” This indicator combines signals from my market breadth Oscillator, option sentiment indicator, and Rydex sentiment indicator.”
If you’d like to sample his fortnightly newsletter, The Amernick Report, and find out how far Larry expects stocks to fall, e-mail him at Amernick@comcast.net and tell him I sent you.
Hidden Pivot Webinar & Tutorials
The next Hidden Pivot Webinar will be held on Feb. 29th - Mar. 1st. This two-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. For more information, or to register, click here.
Miner Aurcana Doing Many Things Right
by Rick Ackerman on February 19, 2010 6:09 am GMT · 4 comments
I’ve just returned from Mexico, where I was the guest of Aurcana Corp. (OTC: AUNFF), a Vancouver-based mining company. The firm owns the La Negra mine in Maconi, a small town about five hours by car from Mexico City, and the Shafter silver mine in Southwest Texas. Although this was my first underground tour, the group of eleven that I was with included some seasoned denizens of the precious-metals netherworld. There were mining-industry analysts and investors from Canada and the U.S., several bullion-oriented gurus » Read the full article