Monday, May 17, 2010

The futures look like they will fall to at least 1.1940 before bulls get any significant respite. In the meantime, we can use the midpoint sibling of that number, 1.2519, to get short if the opportunity arises; or a 1.2265 Hidden Pivot support to get long today in a downdraft.  However, we should also set an alert today and tomorrow at 1.244 to warn of a potentially powerful short squeeze.  That is where the 3-minute chart would turn decisively bullish (see inset). _____ UPDATE (2:56 a.m. EDT):  Shortly after midnight the euro was in an oversold rally after getting crushed down to 1.2235.  This strengthens the case for a collapse down to1.1940, but in the meantime the futures would need to rally above 1.2577 to turn the hourly chart bullish.  _______FURTHER UPDATE:  As a result of Monday's price action, it would now take only a push above 1.2385 today to turn the hourly chart bullish.

Friday's slippage beneath a Hidden Pivot midpoint support at 72.19 implies the futures could now fall to as low as 65.87 over the near term. That target will not be particularly useful for bottom-fishing, since it is too close to a "structural" support at 65.66 created last July. However, the two numbers taken together suggest a likely test, with quite bearish implications if the implied double support fails.

A Hidden Pivot resistance at 576.19 seems reasonable for the  next 5-6 weeks if not sooner.  Long-term traders please note:  The target's midpoint sibling lies at 469.72, and any pullback to that level should fully correct the Gold Bugs Index for the next intermediate move.  More immediately, a booster thrust of at least 15.62 points is needed to launch a rally to as high as 534.35. This target was derived from the daily chart, where A=439.68 on May 5.

Bears appear to be struggling and have so far been unable to correct the futures down to an abc midpoint. It wouldn't take much for the bulls to run the July contract up their ol' wazoos:  a print at 19.475, actually -- just one thin dime above Friday's top.  As of around 8:35 p.m. EDT Sunday night, there were no good handholds for a camouflaged long entry on the lesser charts -- only dueling impulse legs that promised to test the patience of bullish traders. _______ UPDATE (2:48 a.m. EDT):  If Gold and Silver continue to diverge tonight, night owls can try bottom-fishing at 19.065 with a stop-loss as tight as four ticks. ______ FURTHER UPDATE (1:27 p.m. EDT):  The bounce came from 19.03, stopping us out for a small loss and telegraphing the weakness that was to follow.  Current signs indicate a potentially tradable low at 18.575, my worst-case downside target for the very short-term. One other possible turning point worth mentioning:  18.685.

Bears seemed outmatched trying to push this correction down to a modest, 1222.40 Hidden Pivot support identified Friday in the chat room, and they will be defeated if the futures go just a tad higher Sunday night, exceeding the 1237.90 point 'C' of the retracement abc.  But check out the five-minute chart (inset) if you want to see why they had better run for the hills if the rally prints 1240.00, a tick above a subtle but important look-to-the-left peak. ______  UPDATE (2:44 a.m. EDT):  The futures have traded as high as 1242.80;  now watch how quickly they get to 1282.40!

A midpoint Hidden Pivot support at 10258 is equivalent to the one at 1098.75 given for the E-Mini S&Ps. Camouflage entry is suggested for initiating long positions near the target, but if you'd prefer to get long with a straight limit order, bid 10261, stop 10254.  This implies that you could take partial profits on a multilot position as early as 10282 -- 21 ticks above the entry -- since the initial theoretical risk is seven ticks. ______ UPDATE (2:38 a.m. EDT):  The futures are getting hit too hard tonight to suggest this is just a routine Sunday-night gangsta shakedown.  Use a camouflage strategy if you try bottom-fishing at 10258, but be prepared for the selling to continue down to at least 10232 if 10258 fails as support.

We're using  a midpoint pivot at 1098.75 as a minimum downside objective. It comes from the intraday charts and proceeds from a one-off A=1208 (April 30) as the starting point.  The support looks too valuable and tradable to risk wasting with a micro-tight stop-loss, so we should try to get long using camouflage.  In practice this will mean zooming in on the lesser charts if and when the futures reach 1101.00 or so. Thereafter, any valid impulse leg on the 3-minute chart or less should be used for aggressive buying with the penny-ante stop-loss that would apply. Anyone still short from above, when the target was first broached, should continue to scale in contracts or use a dynamic trailing stop.  _______ UPDATE (2:28 a.m. EDT):  The futures were trying to consolidate after selling off the equivalent of about 120 Dow points. This will make camouflage buying near 1098.75 the only way to go if you attempt to bottom-fish, since the tempo of the selling may have increased significantly by then.  Anything below 1098.75 would yield a new short-term target at 1088.00, equivalent to about 400 Dow points.

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