April 2010

At www.blue-eyes.com, a terrific Web site created by one of my oldest friends, Rick Apt, our own Michael Johnston has weighed in with his picks for the Top 10 Worst Sinatra Reprise-Era Songs. Too bad the selections didn't cover the Columbia era ten years earlier, since that's when Frank cut a track that surely marked the bottom of his illustrious recording career.  I am referring, of course, to the infamous "Mama Will Bark," which Frank did as a duet with...Dagmar.

The Yen now has duelling daily patterns pointing up and down.  In evening trading, the Yen has confirmed a small bullish pattern on the daily chart which is nested within the bearish pattern described yesterday.  Hidden Pivot analysis tells us that the midpoint of the bullish pattern, at 1.0830 and shown in green on the chart, will give us insight if it is approached.  If the futures surpass that level, the chances increase that its sibling "D" target at 1.0955 will be reached, which would break the bearish pattern and add to the bullish character of the daily chart.  On the other hand if the midpoint serves as resistance (or if it is not approached at all), then a fairly small decline would break the bullish pattern and put the bearish targets of 1.0632 and 1.0340 back in play.  Our hunch is that the bullish midpoint at 1.0830 is worth shorting with a tight stop: traders should risk no more than $100 per contract in doing so.  We are ambivalent about buying the bearish midpoint, but we still want to buy the bearish "D" target, entering at 1.0342 with a stop at 1.0334, risking $100 per contract. (Posted by Doug McLagan) _______ UPDATE (April 27, 03:20 p.m. EDT):  The bullish pattern displayed in green on the chart with the midpoint at 1.0830 was broken on Thursday, but the bearish pattern remains active.  On the hourly chart we see a hidden pivot at 1.0705 which can be shorted.  A sell order at 1.0703 with a stop at 1.0711 would risk $100 per contract. _______ FURTHER UPDATE (April 27, 9:27 a.m. EDT):  The trade was stopped out shortly after we initiated it. The futures pulled back to 1.0695 after topping at 1.0715, but that wasn't enough of a retracement to partially cover the short.

Subscribers' interest in Sugar is hard to fathom, especially since it tends to do its thing during European hours even though it's NYBOT-listed.  Do you perhaps think its bear market is near an end?  I surely don't.  In any event,  for your guidance I will note that it will take nothing less than a print exceeding 18.13 (a high recorded on March 30) to turn the daily chart bullish.  Subtler and more immediate, though not quite as reliable, would be a print above 17.42 by week's end.

Last week's peak should be it for a while, meaning at least another two to three weeks, since it came within 0.0005 points of a Hidden Pivot rally target of weekly-chart degree. That said, a breakout within the next week or so above the old high would be telegraphing strength likely to be lethal to shorts.

I've hung out a 1219.25  rally target, but it is more to keep you from falling asleep than to induce you to consider said target as a serious and immediate trading possibility.   Money-making opportunities aside, it's hard not to notice that the futures have been struggling unwontedly since last Friday's micro-selloff.  In times past, the mere appearance of a multi-day struggle would have sufficed to allow DaBoyz to set the hook for a short-squeeze.  But because buyers, even those needing to cover shorts, have quite obviously dwindled to nothing, it seems more likely that DaBoyz will need to pull the rug out, dropping the futures in some ostensibly scary way before they apply the ol' short squeeze.  Most immediately, scalpers and night owls are advised to do their hunting on the five-minute chart, which at this instant suggests a bottom-fishing possibility at 1190.50 (A=1207.50). A three-tick stop-loss would be appropriate. _______ UPDATE (9:26 a.m. EDT):  An psychotic lunge overnight invalidated the 1190.50 target, so the trade is off.

June Gold's old nemesis at 1171.80 has returned to challenge the mettle of bulls once again.  Check out the chart if your memory needs refreshing.  Although this is not a conventional or even a look-to-the-left peak because there is no stick-down low preceding it, it validated itself by precisely containing the last rally top --  1170.70 on April 12.  Bears would be seriously on the ropes if the two peaks shown were to be exceeded by an unbroken thrust on the daily chart.  But it is equally valid to say that bulls should avoid all hubris until such time as the peaks have been breached.  In the meantime, we can take encouragement from the fact that Gold is working on a bullish impulse leg to begin with -- even without having surpassed the peaks #1 and #2 (respectively, an internal and an external).

May Silver exceeded our bullish benchmark yesterday by four cents, leaving buyers in command for a third consecutive day. However, the 18.160 rally target shown in the accompanying chart looks too compelling to  have been missed, so we'll stipulate that it be hit or exceeded today before lending our unqualified endorsement to the short-term outlook.   A further push touching 18.330 would be very bullish.  _______ UPDATE:  Ha ha very funny.  After exceeding our 18.160 benchmark by a single penny, the futures collapsed 30 cents . We are beginning to see this dynamic more and more -- gold and silver reaching their respective 'D' rally targets, then dying.  It reaffirms something I said here before -- that although bulls are clearly in the driver's seat and easily able to shake off sellers' hardest punches, they are in no hurry to take prices to the next level.  For our part, to avoid getting fooled -- ever -- we will be more stringently "qualifying our endorsements" for the foreseeable future.

We raised the possibility here yesterday that Goldman’s legal woes would drag on for years, ultimately threatening the uber-bank’s very survival. It’s not hard to imagine that all who have invested in Goldman deals that went sour will smell blood and join in the attack. It’s just the excuse many city and county treasurers will be looking for as their own financial problems multiply.  For its part, Goldman has offered a pretty feeble defense. For instance, the firm’s CEO, Lloyd Blankfein, is claiming that Goldman can hardly be guilty of fraud if the firm itself lost $90 million investing in the toxic mortgage portfolio assembled by John Paulson. Blankfein would like us to believe that the portfolio was a two-way bet, even though Paulson had designed it specifically to fail so that he could make leveraged bets against it. However, there were reports that Goldman did not take a $90 million stake because it liked the investment, but because the firm was unable to unload the last piece of it on outside investors. Will anyone be shocked when it’s discovered that the $90 million was hedged five-to-one by an offsetting “don’t pass” bet similar to Paulson’s? We’re no fans of Goldman Sachs & Co., but the excuses it has trotted out to help with damage control have been so pathetic that it makes us cringe. To the beleaguered Mr. Blankfein, we offer some fresh excuses, courtesy of a post in the Rick’s Picks forum by “TKO,” who wrote as follows: “I can envision the hordes of recently excessed corporate lawyers, out of work immigration counselors, class action jurists—ambulance chasers of every stripe and persuasion lining up for the carrion. However, Goldman has plenty of defenses. There’s the Salesman’s Defense: caveat emptor -- they were offering this crap to ‘investment professionals’

On a fairly dull day, we still managed to turn up some subtleties in charts for Gold and the E-Mini S&Ps that were instructive and illuminating. Day-trading opportunities in these two vehicles had already passed, but a close inspection of the charts revealed that the risk in either instance would have been minimal. We also pored over the 30-Year Bond chart, concluding that any exceptional opportunities we might find therein were probably illusory. Indeed, T-bonds have been saying nothing for four months, and there were no signs that that is about to change.