Monday, April 26, 2010

A 1219.25 target broached here last week remains as compelling as ever as a minimum upside target, but it has probably been advertised too loudly and for too long for us to expect it to work precisely.  Even so, since every top is potentially an important one, we'll stick our necks out with a 1218.75 offer, stop 1220.25.  You could also try shorting a seconday pivot at 1216.00 that just came onto my radar.  I'd give this one just a two-tick stop-loss, since we may be trying again at the higher number. _______ UPDATE:   The trade can stand as suggested, but the funereal pace of the rally to our target has drained my enthusiasm, turning what should have been a simple task into a project.  Please note that rally pivots work best when they are hit cleanly by a feinting thrust rather than being pawed at for fifteen hours.

Rally targets corresponding to the ones given today for June Gold lie respectively at 18.860 and 19.530. I judge the key resistance to be 18.510, the midpoint resistance associated with the 19.530 target.  It is just beneath April 12's key high at 18.605, but my hunch is that the breach of the pivot, followed by a close above it, will telegraph a thrust above the "structural" resistance.

Please note in today's touts that's it's entirely reasonable for a disinterested chartist to project a rally in the Dow Average to as high as 12471. That would represent a gain of a little more than 11 percent from these levels. As I've noted in the tout, the midpoint resistance associated with that Hiddden Pivot target has already been thrashed.

On the daily chart, a succession of lows beginning with last July's 8087 has given us a series of corresponding rally targets all the way up. The next projects a potentially tradable top at 11312.06 (A=92953 on September 3, 2009), although the point 'A' low associated with it doesn't look substantial enough to produce a major top. The maximum high one can project using the same vantage point is 12471.68, a Hidden Pivot that we will want to short aggressively if and when it is achieved. The midpoint pivot associated with that number held up for all of two days, hinting of strong buying power beneath the surface. _______ UPDATE (12:45 p.m. EDT):  In the chat room last night and today, "Emerald" homed in on an 11254 target that nailed the so-far high, 11258.01.  The pullback has since gone as low as 11222, so partial profit-taking was in order for anyone who shorted the top.  My advice in the chat room was to use the Diamonds to get short, but the same advice would apply.

I don't track Copper very closely, and so I missed what could turn out to be an important top recorded two weeks ago.  As you can see in the accompanying daily chart, the actual high came within 0.005 points of a quite clear Hidden Pivot target.  If Copper were to push above that target within the next week or two, it would imply that there is sufficient buying power to push the futures for yet more weeks, if not months.

We’ve become used to jobless economic recoveries, since, more than anything else, it is the downsizing of payrolls that has caused corporate profits to rebound from recessionary troughs. In theory, this is part of the “creative destruction” that helps the economy get lean and mean: Workers who have lost their jobs migrate to stronger companies, many learning new job skills to meet the demands of emerging businesses. This time around, however, so many key sectors have downsized, especially finance, retail and real estate, that there are not nearly enough emerging growth sectors to take up the slack. Which sectors of the economy seem likely to grow the most over the next 5-10 years? Unfortunately, signs point to health care above all, since, if Obamacare takes root, that’s where the lion’s share of new federal spending will be going. We say “unfortunately,” because investors chasing all those new Obamacare dollars will tend to misallocate capital so that it finds its way into what promises to be the most expensive and wasteful boondoggle ever undertaken by Big Government. You can be sure that many companies are preparing for a boom in healthcare and that they will shift their resources into related businesses when the time is right. And just as every corporate Tom, Dick and Harry eventually found its way into some aspect of banking or finance during the boom in real estate and securitized debt, companies with no connection to or knowledge of health care will find pathways into its most promising areas of growth. Doctors Stampede to Retire We should like to think that the growth will occur in places that are crucial to the actual health of the population. An example of this would be the training of, say, 5,000 new physicians to practice general medicine, and providing incentives

Gold rallied sharply on Friday but still fell a smidgen shy of our bullish benchmark.  The shortfall is likely to be remedied today, since it will require only a further push of 40 cents to do the trick.  Thereafter, you should use 1171.50 as a first line of resistance, then 1192.60 as a minimum objective following a close above 1171.50.  Both are Hidden Pivots derived from the hourly chart, where A=either 1123.50 (4/6) or 1102.40 (3/30).