Wednesday, September 1, 2010

Hidden Pivot analysis gives us key levels to watch on either side of the Euro's eight-day trading range.  On Monday the futures made a low ten pips above the midpoint of a small, bearish pattern on the daily chart.  That midpoint, at 1.2613, remains tradeable with a tight stop.  A print five pips below it would signal further downside to 1.2445.  But if the Euro were to move up and out of its current range, it would cancel the bearish pattern and, by touching 1.2881, confirm a much larger bullish pattern aiming as high as 1.3763.  (Posted by Doug McLagan) ______ UPDATE (2:30 p.m. EDT):  The 1.2613 midpoint is no longer tradeable, as the pattern was broken by today's rally.  1.2881 was not reached, but the Euro impulsed up on the hourly chart.

On Monday, silver resumed its recent upsurge after a pause, and it appears bound for 19.655, a midpoint pivot whose sibling "D" target is 20.45.  Silver bugs have been through some rough times since the metal made its bull-market high of $21.44 back in early 2008.  That high, rather than herald the long-awaited Final Squeeze of the concentrated cartel short-sellers, gave way to the shocking decline to $8.40 per ounce.  The action in the silver market since last Tuesday looks a lot like buyers buying and short-sellers covering, and the question arises as we look at the long-term chart: is silver going to make a massive double-top, or isn't it?  If not, it's probably going much higher than $21.44, and it might do so rather quickly.  $21.63 would probably qualify as double-top material, but a meaningful break above that "D" target will be a key signal to watch for.  In the meantime, silver appears bound for 19.655, with 20.45 as the next stop if the rally continues.  The pattern is presented without comment in the attachment.  (Posted by Doug McLagan)

Gold is hovering near key resistance, with two Hidden Pivots, a prior high, and the all-time high not far above.  On Monday, December gold made a two-month high at the exact midpoint of a pattern we had been discussing in the chat room.  The high of 1251.8 was two ticks below a significant prior high of 1252.0.  If the futures can surpass both, and for good measure trade a dollar above the 1251.8 midpoint pivot, yet another bullish signal will be given.  The next obstacles will be "D" targets at 1257.0 and 1258.7 (based on the grey "A" points shown in the attached graphic), then the prominent prior high of 1267.5, and finally the all-time high of 1270.6.  For almost five weeks now, the pullbacks have been shallow, and the deepest one (the "B" point for all of tonight's patterns) ended with a two-hour, 26-dollar moonshot.  In other words, gold is "not letting you in," at least not without high anxiety.  Perhaps this is what the beginning of an epochal up-move should look like, but we all know who is on the other side of this market and what they're capable of doing.  Trade the best-looking patterns, manage your risk, and don't forget about this Friday's non-farm payrolls announcement.  (Posted by Doug McLagan)

The futures were rallying without purpose and for no particular reason early Wednesday morning, achieving a so-far high just two ticks off a minor Hidden Pivot target at 1059.25 (60m chart, A=1037.50 on 8/31; B=1054.25, C=1042.50). That's probably as far as DaBoyz will be able to manipulate this vehicle in off-hours trading, but if they manage to achieve slightly more -- say, 1060.50 or higher -- it would imply they've got something more brazen in mind for later.  Could they push this hoax all the way to 1080.25, turning the hourly chart bullish? Anything's possible, of course, but you'd probably get better odds betting the Baltimore Orioles will capture a wild-card berth in the divisional playoffs. ______ UPDATE (12:10 p.m. EDT):  "GO, Orioles?!"

[Today’s guest commentary, by Ben Rositas, takes an elliptical path in arguing that dumb little laws and legalistic thinking have helped undermine the sort of  self-determination that alone can make real and lasting prosperity possible. RA] This is probably going to seem off-topic for a Rick's Picks commentary, but I hope that it becomes clearer at the conclusion.  First, a brief history. Most summers, I take on a writing project, usually fiction of one sort or another. I've done this for the past 20+ years, and my current project is based on a computer game called Arcanum that was released in the late 90s. I feel kind of silly, being that I'm 34, but when I came across that game recently, I was so intrigued that I bought a copy and spent some time playing it. No wonder the country's in trouble! But if I could create a rich world and story, I figured it wouldn't be a total waste. Anyway, as I scanned for material that would help me capture the feel of such an era and setting, I came across a Wikipedia definition for “gentrification”. Gentrification. You may not have thought about this before, but the process of gentrification is driven as much by lawyers as anyone else.  When newly-minted lawyers buy a fixer-upper and move into the neighborhood, at the same time they are plying their trade, dividing families through divorce, some of the ones I have known would happily take credit for driving up the demand for land and housing – having a “successful impact” on property values, that is. Perhaps I am being too harsh on the legal profession, but it is surely legalistic thinking that drives so many rules that degrade the quality of life. Consider a seemingly innocuous ordinance against, say, clotheslines. I