July 2010

Assuming 1186.60 is not exceeded to the upside first, the minor downtrend shown in the  chart points to at least 1180.90, a midpoint support, or to 1175.20 if any lower. The latter number is just a dime above Tuesday's presumably supportive low, and so it has little value for trading. However, if it is breached by more than 60 cents, or if the futures close below it, that would strengthen the case for more downside to at least 1140.10, a Hidden Pivot target drum-rolled here earlier. ______ UPDATE (11:32 a.m. EDT) :  Saved -- for now -- by the midpoint pivot!  The futures fell to exactly 1180.70, two ticks from the support, then turned energetically higher.  The nearly $22 rally has given Gold some breathing room, but it would need to go $7 higher to qualify as impulsively bullish on the 30-minute chart.

The gnarly bull pattern to 1093.75 or higher is still valid in theory, but we should focus on bearish possibilities right now, since, as of early Thursday morning, the futures have been tracing out a distribution below the 1065 midpoint support of the larger pattern shown in the chart. The downtrend projects to 1043.75, yielding the equivalent of a 170-point fall in the Dow.  A lesser pattern projects to 1047.25, and you can try bottom-fishing there with a stop-loss as tight as 3-4 ticks if the opportunity arises before 2 p.m. EDT. (We'd want to be out of the position before the bell.)  The pivot at 1043.75 could also be bought with a very tight stop-loss, but the lesser pattern looks more promising. _______ UPDATE (11:17  a.m. EDT): The futures have gone the "wrong" way today, Banshee-screaming their way up to 1093.50 (!) s0 far. Perhaps it is a reaction  to the latest increase in joblessness? Or a delayed reaction to the Depressionary implications of the steep new decline in home sales?  Or maybe it's jobless speculators, thrilled with the latest forever-and-a-day extension of their unemployment benefits and eager to deploy a portion of their new lucre in index futures? We'll probably never know which, or why, but it is clear that Wall Street is in an exuberant mood this morning. If you shorted the top as was possible using my target, take partial profits, keep a tight stop, and don't trust the little sonofabitch for even a minute.

(My wife Marilyn, no great fan of our President, is alarmed over the Administration’s veiled attempts to regulate and ultimately control the Internet. The supposed goal of providing “equal access” to everyone is the Trojan Horse here, and although we are confident Internet users are strong enough to defend the medium against whatever radical-leftist depredations Mr. Obama may have in mind, we are not so blithely unconcerned as to ignore the threat entirely. Marilyn’s essay explains what’s at stake. RA) Why should the FCC regulate the internet? Well they shouldn’t, but that hasn’t stopped legions of media watchdogs, consumer advocacy groups and every talking-head panel on PBS from heralding the dangers to our public welfare if the Feds don’t take over the internet “for the people.” These do-gooders want the FCC to classify the internet as a telecommunications service, which would give the Feds the power to regulate who gets the service (everyone!), how much it can cost (profit should not be the issue here) and how each bit traveling through the pipes must be treated…(why, fairly, of course). Oh, and they can make the ISPs pay into a federal universal-service fund used to provide telecommunications services to poor areas. This must be done, they say, to keep the internet "open" and fair. What’s at stake? It appears a lot of hypothetical “threats” to our freedom to send and receive the information we want through the pipes owned by private, profit-mongering companies like Comcast, AT&T and Verizon. Charges that these capitalistic behemoths can’t wait to choose favorites and pick winners among content providers drives the social justice wonks to the perverse conclusion that an all-encompassing Federal regulation is the only solution to the problem. What problem? Apparently, there have been two breaches of bit-rate “neutrality” in seven years, one of them

The way IBM and Apple have gotten shaken down by the specialists this week is about the most bullish thing happening in the markets right now.  If there's a bearish counter-argument, it is that DaBoyz got in at prices so low that they won't have to engineer a rally to new recovery highs to cash out.

IBM looks like the same kind of sleaze-trap as Apple, what with yesterday's $7 gap-down opening followed by a $3.63 rally to close on the intraday high.  This brazenly manipulated selloff did no damage whatsoever to the daily chart, and even on the "60" it lacked the guts to take out a look-to-the-left low at  122.17 from July 6.

The bull pattern show in the chart is as ugly as they get, but we may have to face up to its most exuberant possibility -- i.e., a thrust to as high as 1136.50. The midpoint is 1093.75, but it's not worth much for analytical purposes because it lies in the thick of the supply zone created last week.  I have my doubts DaBoyz will be able to put shorts on the run for a second straight day, but they will at least have help from the recurring dearth of sellers.

Silver appears to have bounced from a too-obvious place yesterday, a penny above the previous day's spike low. We'll give this evening's moderate rally the benefit of the doubt nonetheless, and infer the possibility of more upside over the near term to 17.880 -- or possibly to 17.975 if any higher. A negative offset, however, is that tonight's thrust failed by a tick to generate an impulse leg that would have provided "camouflage" for a long entry.

Yesterday one-act performance provided yet another whoop-dee-doo rally that failed to push above the previous day's high. Our focus should therefore remain on the 1140.10 correction target -- or, alternatively, on the 1222.30 "look-to-the-left" peak where a rally would begin to look feisty. Best case today, based on the 15-minute chart, would be 1202.10, subject to a midpoint test at 1195.70.  Those numbers will remain valid as long as 1189.20 has not been exceeded to the downside.

Just when we thought it might be safe in another five or ten years to go back in the water, our muckraking colleague Matt Drudge is out with a report asserting that methane levels in certain areas of the Gulf of Mexico are a million times higher than normal.  Drudge didn’t pull that number out of thin air, unfortunately – it came from a chemical oceanographer at Texas A&M named John Kessler.  A “chemical oceanographer.” Doesn’t sound like a kook, does he? “Methane levels ranged from 10,000 to nearly one million times higher in some spots than normal concentration,” said Kessler, who had analyzed water samples collected from within a seven-mile radius of the Deepwater Horizon wellhead. The possible implication is that sea life could die off in a big way because of oxygen depletion, and that greenhouse emissions could cause the climate to change. You can search the web for this story, but it is no longer available even at Drudge’s site. We found it linked at www.floridaoilspilllaw.com, but the whole methane angle seems to have fallen beneath the radar of the mainstream press. GoogleNews has provided spotty coverage of the Gulf disaster lately, presumably because the news-gathering organizations from which Google steals its stories have relatively limited access to the facts. Even so, there was a scary echo of Matt Simmons’ doomsday talk in the latest, officially acknowledged developments. Most significantly, it would appear that the bedrock separating the oil and gas from the terrestrial world is more fragile than the guys-in-the-know care to discuss. It is also clear that oil and gas seepage is occurring away from the wellhead, and it may be occurring on a catastrophic scale. But yesterday was the first time we heard Admiral Thad Allen himself allude to the possibility of a collapse