Wednesday, May 12, 2010

The futures look primed for a further drop to 72.19, a Hidden Pivot midpoint lifted from the daily chart (A=87.15).  If and when the time comes, you can bottom-fish there with a stop-loss as tight as 71.05.  Alternatively, it would take a thrust exceeding 79.76 to turn the hourly chart bullish and a 77.88 print to achieve this on the "15".  Neither benchmark is subtle enough for trading purposes, so I'll suggest zooming down to the 5-minute, where 76.16 or better would create a bullish impulse leg.  If there's a b-c pullback thereafter from 76.18 or lower on the 1-minute chart, I'll suggest that you take the money and run by using a camouflage 'X' entry.  If this opportunity materializes, the key to capitalizing on it will be to act very quickly on the buy-stop. _______ UPDATE:  The futures popped for a weak rally, but not in way that closely resembled the scenario sketched in the chart, so we did nothing.

We hold 800 shares with an adjusted cost basis of 11.75 against eight May 18 calls shorted for 0.64.  Yeah, you're right, I should have had a stink bid in to cover the calls when they dipped as low as 60 cents.  We'll retire them at some point in the next week and retain the stock as a long-term hold. And someday we'll feel only mildly chastened for having missed $2 or $3 of the move when the stock eventually trades for $50. For now, though, I will indulge myself one more day of being frozen at the wheel, since  yesterday high at 20.96 was an exact Hidden Pivot target on the hourly chart (A=16.71).

Our ambitious Hidden Pivot target at 19.430 caught the high of yesterday's powerful thrust within half a cent.  Now what?  Most immediately, we should expect a 50-cent pop to 19.825, a minor Hidden Pivot that comes off the hourly chart (A=17.080).   Above it, however, sits a big-picture objective at 21.530 first broached here a while back. That's where July Silver is headed at a minimum, but we'll want to see how the rally interacts with this major pivot before we look for bigger fish to fry on the weekly chart.

The futures have been shredding minor rally targets with the greatest of ease, so it'll be interesting to see how well they do in the featured match-up against 1243.10, a Hidden Pivot that is,  as we like to say, not chopped liver.  Notice in the chart how all three price points -- A, B  and C -- are single-bar affairs on the hourly chart, producing a rally pattern that is clean, nicely symmetrical and compelling.  This suggests that although the target will be achieved as forecast, it is not likely to be a pushover.  If it is bulldozed within an hour of first being touched, however, it'll be a good time to start pondering the monthly chart, with its 1398.50 (!)  target. ______ UPDATE (10:53 a.m. EDT):  A powerful, $26 rally hit 1245.40, effectively pulverizing the targeted resistance and all but guaranteeing higher prices over the near term.

The futures have sold off nearly 30 points after peaking less than two points from an important Hidden Pivot target at 1170.25.  I did not suggest shorting there because the target seemed too obvious, coming as it did from an impulse leg drawn from last Thursday's low (where B=1136.00).  We should respect this selloff, since the recent peak has the potential to become a major top.  Further evidence of this would come on a print today below 1142.75, a minor midpoint support that comes from the 15m chart (A=1158.50).  If it's breached by more than two or three ticks, expect the selling to continue down to at least 1134.75.  That's a Hidden Pivot, and you could bottom-fish there with a stop-loss as tight as 1.00 point. ______ UPDATE (10:42 a.m. EDT):  The futures have bounced 25 points from a so-far low of 1141.00.  This is a hair more than the three-tick breach that I'd said woul8 decisively breach the pivot, but it is clear in retrospect that the hoi-polloi were focused, simply, on Monday's 1140.50 bottom as structural support.  The rally lacks real power and would need to hit a minimum 1173.25 to impulse on the hourly chart -- a feat that looks like an even-odds bet for today at this moment.  Even so, the strength of the rally, such as it is, comes as a bit of a surprise, since skepticism toward the latest, trillion-dollar bailout, seems to be nearly universal  (i.e., everywhere but on CNBC).

Because we called the latest Eurobailout a PR hoax in our most recent commentary, we’ll give equal time to a quite different point of view posted in the Rick’s Picks forum.  The author is “Cameroni,” a frequent contributor who says the European Union deserves praise for not shunning Greece and the PIIGs, especially since it will require considerable sacrifice on the part of the “haves.” Here’s Cam: “The European Union must be congratulated. They have acted responsibly by choosing union over self interest and Nationalism. Instead of shunning Greece, shutting her out and locking the door behind them they have instead made a tremendous sacrifice and have opted instead to take a share in Greece’s misfortunes despite the obvious risks. And they have put their collective neck on the line for the whole union by establishing what amounts to an insurance program for the rest of the sick patients in the group. The pain will be shared while expectations of future growth have been lowered. “At the same time they have sent a clear message to bond rating agencies. You can be replaced. Nobody needs a Rhodes Scholarship anymore to see the clear connection between the Bond raters and currency speculators. Nor do we need a microscope to see how destabilizing those influences can be nor how quickly the global financial system can be brought to the brink of economic calamity. The events of the last two weeks has made it clear to all just how disruptive those influences can be and what negative implications it has for both political stability and global markets. Their blunder will bring on change. No Child’s Game “This is not a child’s games anymore. Future financial reforms may well include putting limits on the speculation of currencies. We will see what transpires with the