May 2010

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

Apple and Google, two bellwethers for these crazy times, showed relentless energy yesterday and probably would have performed even more strongly if not for the drag from profit-taking in call options acquired at last Thursday's lows. Look for more leadership from these stocks unless something serious in the news holds the market back.

For the record, the nimble trader could have bought May 260 calls for 0.50 when stocks were bottoming last Thursday.  They traded for 4.50 yesterday, when profit-taking probably acted as a restraint on Apple's further progress. The stock's pullback was so shallow that anyone still short should have been alarmed by day's end.  A rally to 266.32 is indicated, with a possible midpoint impediment at 257.43.

Silver curiously held its ground yesterday against mild weakness in Gold, setting up a possible thrust to as high as 19.430 over the near-term. First, though, buyers will need to push the June contract past  hidden resistance at 18.825, the midpoint sibling of our target. A 50-cent pullback would not only do no harm to the bullish technical picture, it would help rest the futures for a run-up above last week's moderately challenging highs.

Friday's 1214.90 peak will have double stopping power because of a midpoint Hidden Pivot resistance not far below it at 1213.75.  A close above the latter number would signal that the futures are ready to take a leg up to 1243.10. There were no glowing opportunities to get long early Monday evening, although  the  1193.70 midpoint shown in the chart would be worth bottom-fishing if the opportunity should arise. It would of course be preempted if the futures rally first above the 1204.80 high I've used for a point 'C'. _______ UPDATE (1:22 a.m. EDT): A gentle rally surpassed 1204.80 overnight, negating the opportunity.

Friday's wilding spree didn't quite reach the nakedly ambitious target at 1170.75 that I'd said would max out the move, so it's still valid.  Above it is a new target at 1205.25 that came into focus as a result of yesterday's price action.  It is tied to an 1174.75 midpoint that hasn't much trading value, since it coincides with some important highs recorded last Wednesday.  Night owls should look for a possible buying opportunity on a pullback to 1151.50, a minor midpoint support that comes from the hourly chart (A=1159.50). _______ UPDATE (1:15 a.m. EDT):  The futures are in screw-the-pooch mode tonight, having dipped as low as 1148.50. It looks like it's going to be a long night.