Tuesday, June 15, 2010

Silver has been in a holding pattern for two months, so let's not begin the day expecting too terribly much. A print at 18.815 is what we should want to see before we take serious encouragement, since that would exceed a look-to-the-left peak on the hourly chart that was made May 19 on the way down.   If you'd prefer to be on a hair trigger, and perhaps to get long using camouflage, the impulsive breakout on the 3-minute chart would come at 18.335.

A 15-point rally today that touches 1237.00 is where the action would start to look encouraging for bulls. However, as noted in an earlier post, it will take a close above 1237.40 to set the futures on a course to at least 1258.60 -- or perhaps 1272.60 -- over the near term. If they head lower, the 1207.00 target flagged here earlier is still valid and can be bottom-fished with a stop-loss as tight as a point.

It's been a while since we pondered this limping lump of brick dust, but it's not a happy sign for bulls that the stock has slipped so easily beneath the Hidden Pivot support shown in the chart.  What it suggests is that Goldman will fall anew, this time to Hidden Pivot support at 122.25. Camouflage shorts are encouraged from these levels, but if you've got the patience to wait, bottom-fishing at 122.25 could provide the kind of low-risk opportunity that we thrive on.

Crude has been rallying for the last week into the weight of a powerful downtrend that became manifest on the weekly chart in late May.  The rally projects to 78.08, but we shouldn't be surprised if it sputters out somewhere beneath that Hidden Pivot.  I'd suggest trading it from the long side nonetheless, although the action was too squirrelly Monday to leave much in the way of handholds for night owls.

Bears who are primed to panic on the next 100-point rally should take a look at the Dow's weekly chart before they jump: heavy, heavy, heavy!   It's difficult to predict how high, or even whether, DaBoyz will be able to squeeze the blue chip average this week, but we'll be watching vigilantly each day for opportunities to get short. Assuming yesterday's low at 10186 is not taken out first, a midpoint resistance at 10286 shows promise.  If it gives way, however, buyers would be telegraphing more upside to as high as 10387.

Investors enamored of gold now have two supposed contrary indicators to worry about:  the New York Times, which did a front-page feature over the weekend on bullion’s growing popularity as an asset class; and CNBC, where a Deutsche Bank analysts on Friday predicted a $75 surge to $1300 an ounce over the next few days.  Although we've never been comfortable following recommendations aired on CNBC, the ostensible endorsement of the Gray Lady is another story. Our respect for the Times’ business section goes back to the summer of 1976, when they were the first big newspaper to notice that a small company called Resorts International had opened an office in Atlantic City.  Resorts’ common shares were selling for about $2 at the time, but – gold bugs take note – after the Times story ran in August, RTA class ‘B’ shares began a steady ascent over the next two years to around $160. So don’t think that just because gold investments have gotten front-page treatment in the New York Times that that will be the kiss of death for precious metals. The Times, after all, is not merely some upscale cousin of the mentally retarded Newsweek. And for every half-competent, politically warped bloviator like Paul Krugman who writes for the paper, there is a top-flight reporter elsewhere in the newsroom like Floyd Norris, who gets his facts straight and covers the issues of the day with the kind of balance and understanding that can truly help readers get a handle on the news. Gold Will Take No Prisoners Contrary indicators aside, our own technical runes suggest that gold’s long-term bull market remains healthy and robust but that deep-pocketed buyers are in no particular hurry to push quotes up to new levels.  Under the circumstances, we’d be surprised if the CNBC guest's

Yesterday's vaporous hoax-of-a-rally gathered irresistible force as such rallies nearly always do -- on almost-nonexistent volume, in the dead of night.  It took bears three hours to regain their footing after the ambush, but by day's end they'd succeeded only in bringing the futures back to unchanged (or thereabouts).  I continue to favor the short-side -- fervently -- since Mr. Market has been making it damned near impossible to get short.  I've also got Steve Puetz's cycle date in mind and mentioned it in the chat room.  He notes that the eight biggest crashes in history have all occurred 3-6 days after a full moon that occurred within six weeks of a solar eclipse. That implies a June 20-29 window in this case -- and hey, I'm not superstitious myself, but where's the harm in laying in a small, speculative inventory of puts ahead of the weekend.  In the meantime, I'm not going to suggest anything clever to get short today, since all it would have taken yesterday was to have laid 'em out just beneath the in-your-face high at 1102.75 recorded on June 4.  Sometimes being devious and diabolical requires only that Mr Market do the obvious.  Yesterday's little trick was right out of Poe's  "The Purloined Letter".