Friday, May 21, 2010

A Hidden Pivot at 9595 is equivalent to the 1022.75 downside target given for the E-Mini S&Ps. If you want to use the Mini-Do futures to go bottom-fishing, I suggest looking for a tradable abc reversal on the lesser charts around 9610.  The actual Hidden Pivot lies at 9599, my minimum projection for the near term.

We should expect 1022.75 not only to be reached over the next 3-5 days, but to give way to a tradable bounce as precise as the one we saw from 1098.75. More immediately, it will take a thrust above 1096.75 to set bears a-running. Shortly before 3 a.m. EDT, night action remained featureless as the futures ascended into a volume-less vacuum.

For reasons that the chart accompanying today's commentary makes clear, we should want to see gold hold above the 1156.20 low recorded on May 5, since that would avoid creating a bearish impulse leg on the daily chart.  The most bullish scenario I could imagine for today would be a pop above the 1199.80 look-to-the-left peak created May 19 on the way down.  If that were to occur, bulls would be ready to romp come Monday.

Because  Silver  is dominating the discussion in the chat room tonight, let's get right down to it.  The futures would need to pop above 18.165 today to turn the intraday charts bullish, but they must avoid dipping below 16.590, since that would create a bearish impulse leg of daily-chart degree.  There are no hand holds to try and get long-on-the-cheap at the moment, but to put the correction risk in perspective, July Silver could fall all the way down to 15.710 ( a "reverse" pivot; see chart) without so much as implying that the long-term bull is in jeopardy.

Funny how the “accident” that sent the Dow plummeting a thousand points a couple of weeks ago has morphed into the real thing. The blue chip average fell 376 points  yesterday, and we’re predicting it will fall a further 470 points, to exactly 9592, before buyers get decent traction.  Easy come, easy go, as they say. The initial selloff was originally attributed to a clerical error.  If this turns out to be true, Wall Street may yet produce a scapegoat for the bear market disaster that is yet to unfold. Something like this happened when epidemiologists traced AIDS back to patient zero, a French Canadian flight attendant named Gaetan Dugas. He died young, evidently before a torch mob could find him, but you can bet the Wall Street clerk is already living under an alias, assuming he ever existed.  The charts offer an indictment that does not distinguish between a clerical error and a real panic. Let the stock and futures exchanges bust all of the trades they want and say it never happened. The swoon will always be there in graphic form, a synecdoche for these interesting times.  In the meantime, they have provided us with ABC price points that make predicting the future, at least for the moment, a piece of cake.  Be sure to remind us in a week if that 9592 target doesn’t pan out. We’ll be out on the ledge, entertaining a crowd. With the stock market in avalanche mode yesterday, some Rick’s Picks subscribers seemed to despair that Gold might continue to fall in sympathy.  Bullion has been hit pretty hard this week, to be sure, and it was taking yet another pounding Thursday night as we went to press.  But we doubt that sellers can keep it up, lacking as they do a