Friday, August 13, 2010

September Silver has two promising uptrends pushing it at the moment: a big one begun from 17.230 on June 6, and a lesser one begun from 17.480 (a one-off low) on July 29.  Both are shown in the accompanying chart. The first has already triggered a "buy" and slightly exceeded its 18.460 midpoint resistance, which is bullish. The second has also triggered (yesterday, at 18.100) but has yet to test midpoint resistance at 18.405. Let's be conservative and stipulate that the futures close above that last number before we infer that liftoff is in progress.  A two-day close above the 18.460 midpoint of the larger pattern would imply SI is unstoppable and bound for at least 19.595.

A Hidden Pivot at 1225.50 (see chart) seems likely to be reached because its sibling midpoint at 1209.00 was decisively punctured by yesterday's upthrust. Keep your fingers crossed for an easy move through the target, though, since that's what it will take to put bulls on the advantage come Sunday night.  "Easy" in this instance implies a penetration, by at least $1, within 15-20 minutes of when the resistance is first encountered by buyers.

The Indoos may have seemed resilient yesterday, but they got shoved down far enough intraday to extend Wednesday's selloff into a bearish impulse leg on the daily chart (see inset).  Predicting where to get short for the next leg down would be a shot in the dark at the moment (i.e., Thursday night), since the Dow could rally to as high as 10474 before it sevens out. In any event, I'd suggest using the 15-minute chart to jockey into position to short the 3- or 5-minute chart via "camouflage."  The "15" divulges, for one, that yesterday's 10269 low still has 50 points to go before it reaches a clear (clear enough to bottom-fish with a very tight stop-loss, if you please) target at 10219 (A=10678 on August 10 at 4 p.m. EDT; B= 10428 on August 11 at 10 a.m.)

I'd said a close below 1082.00 would augur more downside to at least 1050.75, and so the futures coyly rallied ten points off their lows yesterday, barely meeting my criterion with a close at 1079.25.  The price action smells, and tonight's phony rally has not changed my mind about a 30-point plunge being imminent. Even so, let's not fail to take heed of the urgent manipulation by DaBoyz yesterday as they attempt to trigger off one more distributive rally before pulling the plug.  First, leveraging lousy news from Cisco, there was Wednesday night's takedown on zero volume.  Then, They compounded the crime, pulling out the rug Thursday morning on the opening bar to shake out the last of the Cisco scaredy cats.  I doubt there'll be "good" news sufficient to short-squeeze the nervous Nellies on Friday, but then, DaBoyz need only push the futures to 1092.00 to hang them on the ropes.

[Editor's note: Thursday's commentary drew such a strong reponse that I've extended its run by a day.  RA] We suspected years ago that the day would come when the Fed would have no more room to move. Administered interest rates were bound for zero, and once they got there easing would cease to be an option. Except that we were wrong.  Now it turns out the Fed can, and will, ratchet up the desperation meter, already well into the red zone, to new and untold heights, stepping up purchases of long-term Treasury debt with proceeds from the sale of mortgage-backed securities from the central bank's fatally swollen dumping-ground-of-a-portfolio. Bernanke’s cheering section always said he would do whatever it takes, but perhaps it’s time for them to acknowledge that, in actuality, he is doing not what it takes, but only what he can do, short of triggering a hyperinflation. Surely the Fed chairman’s minions must be disappointed that his latest, unprecedented attempt at stimulus has a cash value estimated at only $300 billion – a mere pittance in a global Ponzi game valued nominally at perhaps three thousand times that. Paul Krugman, the New York Times' hairy-knuckled Keynesian, must be asking himself whether Helicopter Ben is ever going to get serious. Sorry he has let you down yet again, Mr. Krugman. Although earlier predictions we'd made here may have overlooked this latest, hopeless step the Fed has taken, let us hazard another prediction by which you can judge for yourself our foresight, or lack thereof. To wit:  The Fed’s suicidal, capital-destroying bond-buying ploy may suffice to jolt the mountebanks, imbeciles, pedophiliacs, thimble-riggers, thieves and suppurating grey matter on Wall Street into pretending that “something” has happened, but the likelihood that this “something” will have a positive, long-term impact on the economy is about