May 2010

Gold's inability to get traction may simply have to run its course -- meaning the June futures could slip down to as low as 1211.90, a Hidden Pivot, as they stage for the next thrust.  Alternatively, a print above 1238.20 would turn the lesser charts bullish once again -- and presumably buoyant.  The accompanying chart shows the relevant look-to-the-left peak that would make this so. ______ UPDATE 12:39 p.m. EDT): Sellers overshot the target by $5, implying they are not yet done.  If this proves to be the case, the futures should soon be headed down to at least 1204.50, a midpoint pivot, or to as low as 1189.00 if it is breached on a closing basis.  Alternatively, it would take a print at 1230.20 today or tonight to turn the lesser charts bullish.

From a Hidden Pivot perspective, the markets seemed unable to do anything right yesterday:  the E-Minis did not fall quite far enough;  their short-squeeze recovery from half-baked lows was too strong, especially considering the whole world is quite visibly going to hell in a bloody handbasket; Gold did not reverse with a vengeance after being stupidly sold down by the usual clueless imbeciles; and, finally, the euro finished the day on an upswing, notwithstanding the fact that even the village idiot knows the currency's on its way down into the low 80s.  We'll just have to hope for better today, I guess.

[Lately, Mother Earth has been angrier than we can ever recall. A friend of ours with a keen interest in the predictions of seers alerted us a few years ago to the prospect of a dramatic increase in seismic activity around now, so we were naturally eager to have him update the forecast. He has obliged with the grim predictions detailed below. Be warned that his outlook is not for the squeamish and that it suggests 2012 could be a year in which natural disasters impact hundreds of millions of lives around the planet. Incidentally, if you’d like to sample the eclectic range of Rick’s Picks commentary, we offer a free seven-day trial, including daily stock and futures recommendations.] Rick has asked me to outline the impact of potential future geological events on the U.S. economy. I am not a geologist or an economist, (although I do have an eclectic university education background) - my own personal studies for the last several decades have included amongst other things various prophecies about future events from multiple sources around the world. I write this anonymously, and am writing it at Rick's request. I am just putting it out there for your consideration - what you choose to do with this prophetic scenario, if anything, is up to you. Even the least observant amongst us is slowly becoming aware of a building 'drumbeat' of seismic events on our planet - that seem to be increasing in both frequency and magnitude and occurring in areas where we find significant populations. Recent large scale destructive events include the Indonesian tsunami; central China, Haiti, Chile and last week's western China earthquakes and also the recent eruption of an Icelandic volcano. Combined, these major seismic events have cost hundreds of thousands of lives and billions in damages.

There are plenty of touts to consider for Monday, the better to orient ourselves as the week begins.  DaSleazeballs and nervous Nellies had the index futures down just a bit Sunday night, telling anyone who is watching that the supposedly smart money is in a buying mood, at least as of 9:30 p.m. ______ UPDATE:  As of around 2:20 a.m., real fear was starting to creep into the selling. Check the update for the E-Mini S&P tout for further details.

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!