April 2010

I'm not going to lie and tell you how jazzed I am about the prospect of shorting 1202.50, stop 1204.25.  It's a Hidden Pivot all right, and it seems likely to show some stopping power. But we shouldn't kid ourselves about a possible Mother of All Tops.  Ordinarily this trade would get a three tick stop-loss, but we'll give it a little more because...well, you never know.  If we lose the $87 that's theoretically at risk, just remember that the last few winners in the E-Mini produced enough in theoretical gains to offset scores of $87 losers.  ______ UPDATE:   There's $87.50 we can kiss good-bye!  But it bought us the near-certitude that ESM10 is about to cruise on up to at least 1212.50 over the very near term.  Short there too, please, stop 1214.25.

Although there is no denying we are living in Interesting Times, who could have imagined we'd see a day so profoundly uneventful that NBC would lead Tuesday's newscast with a letter from three astronauts lambasting Mr. Obama for giving up on space exploration?  As if to drive home the fact of yesterday's news void, Brian Williams' second story concerned a Toyota recall due to alleged rollover problems with the big SUV.  If the importance of news could be measured using Bollinger Bands, they'd have kissed yesterday.

Although Comex Gold missed a bullish trigger point by a hair the other day and has since sold off by about 2% , we expect the loss to be easily recouped, and gold quotes to be bounding sharply higher, by no later than next mid-week. Readers may recall that we recently projected a surge in June Gold to at least $1245 once $1171.80 was exceeded. A thorough explanation of the proprietary method we used to forecast this outcome, as well as details concerning the upcoming Hidden Pivot Webinar,  can be accessed by clicking here.  Suffice it to say, on Monday, gold futures tiptoed to within an inch of our threshold, peaking at 1170.70.  A further rally of $1.20 would have done the trick, but it was not to be; instead, the futures retreated without having exceeded the resistance peak shown in the chart below. The resistance is what we refer to as a “look-to-the-left” peak. It is just obscure enough that not all chartists and traders, even diligent ones, will tend to notice it.  But we most surely do, since, according to the Hidden Pivot Method, each discrete upthrust must surpass at least two prior peaks to re-energize the bull trend.  When a rally narrowly fails to do this, we usually infer that buyers are a bit timid. In this case, however, although the rally appears to have chickened out just shy of the “look-to-the-left” peak at 1171.80, it did so after having surpassed no fewer than four other resistance peaks. We’ve labeled them in the chart above and note that the peaks #3 and #4 are “external” highs whose breach implies more buying power than the breach of “internal” peaks #1 and #2. What to Look For… In this context, we should think of gold’s recent rally from 1086.10

A recent Reuters analysis expands on the points made in today's commentary, which concerned the undiscounted market risks of a war between Israel and Iran.  Click here  to access the article.

Crude oil might be trying to reverse its five-day downtrend this evening, as the session low is just above a prominent Hidden Pivot.  Traders should watch this bounce and consider entering on the long side if a camouflaged opportunity arises.  If the 83.90 pivot is breached by more than a few cents, we might expect oil to find support at 83.46, another Hidden Pivot.  The futures are probing for a "C" point on the daily chart, and if they find it above, say, the 81.50 level, the chart will remain very bullish.  A move below the 78.86 prior low will turn the daily chart bearish and would cancel a still-active pattern with a "D" target at 88.71.  (Posted by Doug McLagan)  _______ UPDATE (12:49 p.m. EST):  The rally from 83.94 did not get very far, but the 83.46 pivot was surpassed by only three ticks, and we never recommend stops as tight as that in the volatile crude oil market.  Traders who bought at 83.46 were rewarded with about $500 of upside per contract.  Subsequently the futures fell to 82.51.  The 88.71 target is still in effect, but for now we will remove crude oil from the actionables list and await further developments.

Gold is getting hit again early Monday night, but the selling thus far has not added any bearish weight to the intraday charts.  That would take a print at 1152.10 -- somewhat above a Hidden Pivot support that I''ve suggested for bottom-fishing by night owls.

Yesterday's rally to 1170.70 was over before it began for those who lacked the wizardly prescience to have gotten long at the end of Friday's session. The fright-wig selloff that ensued has been technically gratuitous so far, but it gives us a mediocre Hidden Pivot for bottom-fishing Monday night at 1154.10. A two-tick stop-loss is suggested, since any lower will pick up interference from Friday's 1152.20 low.  That the so-far unsurpassed benchmark at 1171.80 flagged in yesterday's tout remains crucial to the short-term picture has now been proven beyond a doubt.

Yes it's boring, but we'll use the 1202.50 rally target again as a place to get short, placing a stop-loss three ticks above it.  This Hidden Pivot promises to be no miracle cure for short squeeze-itis, but it will allow us to play without risking much.  Night owls can use the tail end of yesterday's corrective flag (A=1193.25 at 3:15 p.m. EST) to bottom-fish a Hidden Pivot target at 1191.25 . A two-tick stop-loss is what I am recommending, but you can widen it by 50%  if you feel I'm being too stingy. :)

With the Dow Average trading above 11000 -- a dubious benchmark that has been achieved on the thinnest trading volume imaginable -- it’s a good time to remind ourselves that the start of Armageddon, never more than dirty bomb or missile away, may be closer than usual these days. Or are we perhaps overreacting to news stories concerning the latest nuclear developments in Iran?  Here’s a timely summary from Debka.com:  “In addition to developing a ‘third generation’ centrifuge for speeding up uranium enrichment, Iran is close to activating its Bushehr nuclear reactor and completing its Arak heavy water plant - both providing easy access to weapons-grade plutonium for smaller, lighter and more easily deliverable nuclear warheads. Plentiful new uranium deposits have also been discovered in central Iran.”  If Europe was a powder-keg in the summer of 1914, the Middle East is sitting on enough explosives in 2010 to knock the Earth off its axis. Iran’s rapid progress in developing a bomb will not be news to President Obama, whose response has been to push for more – thought not necessarily tougher -- sanctions. Those who favor this so-far fruitless approach should read Steve Stecklow’s recent story in the Wall Street Journal concerning the U.N.’s supposed campaign to freeze Iranian bank assets. Turns out that a total of $43 million has been frozen in the U.S. to date -- equivalent to about a quarter of what Iran earns on oil revenue in a single day.  So much for the West’s ability to rein in a rogue state by, so to speak, repossessing its furniture. Throwing in the Towel For his part, Israeli Prime Minster Netanyahu appears to have thrown in the towel on sanctions, boycotting a U.S.-sponsored summit on nuclear terror that opened yesterday in Washington.  That Netanyahu may have given