Thursday, September 2, 2010

I'd outlined a possible trade for night owls in the E-Mini S&Ps, but the futures have turned  coy around 1:15 a.m., apparently lacking the moxie to reverse the weakness engineered earlier by DaBoyz. The suggested trade is still valid after making the necessary adjustments, but it's possible the next short-squeeze will have to wait until after the opening.

Whether and when December Silver surpasses the important prior high of 19.55 will tell us a lot about its imminent price action.  Despite making a new rally high on Wednesday, the futures failed by two cents to surpass the important prior high of 19.55, visible on the daily and weekly charts.  The December contract is hovering just below the first of four crucial prior peaks, and it is not out of the question for all of them to be surpassed quickly, given the energy with which silver trades at times.  There will be a battle, of course, but we should not be dogmatic about who will win this one.  The four levels to watch on the December chart are 19.55, 19.915, 20.80, and 22.055.  And while camouflage is a trading technique that is used primarily on short-term intraday charts, silver traders and investors should take camouflage principles into consideration in analyzing the longer-term silver charts if and when these levels are broken.  A first instance would be a meaningful pullback from the 19.655 midpoint pivot described yesterday, should it occur.   (Posted by Doug McLagan)

By pushing above a prior peak at 1080.25 that I'd noted here yesterday, the futures created a robustly bullish impulse leg of daily-chart degree that is likely to have positive implications beyond the Labor Day holiday. The outlook would grow still more bullish if the rally were to exceed a third peak at 1098.50 either today or tomorrow.  Alternatively, sellers would have to push this vehicle down to 1013.25(!), exceeding a low from July 6, to negate the bullishness of yesterday's move.  The best "camouflaged" entry opportunity I can foresee at the moment (i.e., around 12:53 a.m. EDT Thursday) would trigger at 1079.25, based on the pattern shown in the chart, and the odds would be best if this occurs overnight. The midpoint resistance lies at 1081.00, and longs from just below it could breathe a sigh of relief if it's exceeded, since that would imply an easy ride to the 'D' target at 1084.75.  _______ UPDATE 1:13 a.m.):  Just to be annoying, the little scuzball has made a lower point 'C', changing the entry trigger to 1078.25 and the midpoint resistance to 1080.00. You'll be on your own if this little cat-and-mouse game continues into the night. _______ Further UPDATE (9:39 a.m. EDT):  Entry at the new trigger point would have produced a low-stress trade, since the futures went on to achieve 1084.75. As a practical matter, however, the trade would have been less than ideal because the point 'C' low of the pattern was formed from multiple bars, not the single one that I (much) prefer.

On Wednesday, gold bounced off of a Hidden Pivot that had been touted several times, and in the process traced out a new pattern, not yet confirmed, whose "D" target is near the all-time high.  The Wednesday high was four ticks below our 1257.0 "D" target (mentioned yesterday and in earlier touts), and a quick decline of more than twelve dollars followed.  So long as this 1244.1 low is not revisited, a print of 1249.9 would confirm a new, smaller pattern with a midpoint at 1255.6 and "D" target at 1267.2.  Traders should continue to bear in mind Friday's non-farm payrolls announcement, an event which has at times been preceded or immediately followed by heavy selling of gold futures.  (Posted by Doug McLagan)

Silver traders and investors should check out today's tout for the Comex December contract, since it reiterates a potentially important target that you may have missed when it was last mentioned two weeks ago.