Thursday, September 9, 2010

Today is the first day of the Rosh Hashanah, the Jewish New Year, so the markets are likely to be pretty sluggish.  Rick will be away for the day but wishes all who observe the holiday health, happiness and prosperity in the year ahead.

December copper impulsed down violently on Wednesday evening and is close to confirming some new bearish targets.  If the futures touch 3.4140 while remaining below 3.4415, new targets will be confirmed at 3.3870 and 3.3325.  This occurs within an active bullish pattern on the daily chart, suggesting that a bottom-fishing opportunity might emerge from the intraday action, which is best viewed on the 15-minute chart.  The smaller pattern, if confirmed, would justify buy and stop orders placed $0.005 apart from each other, risking a hypothetical $113 per contract.  (Posted by Doug McLagan)  _______ UPDATE (2:44 p.m. EDT):  The futures moved the "C" point up to 3.4670 and then confirmed it with a sufficient decline, giving us new targets at 3.4125 and 3.3580.  We continue to like the idea of buying the midpoint and will leave the tout marked as actionable.  Again we recommend risking half a cent ($0.005) per pound of copper on the trade.  The stop should be below 3.4100. _______ FURTHER UPDATE (1:20 a.m. EDT, September 10):  Copper traded down to 3.4065, stopping us out of the trade before bouncing significantly.  In looking at the chart afterward we couldn't help but notice that had we used the 3.5150 "A" point to the left of the one we did use, we would have nailed it.

We deconstructed yesterday's rally during the weekly tutorial session and found only rubbish -- in this instance, gratuitous chop driven by feeble buying and an absence of urgent selling. Bulls held a small edge at the bell, but you might as well flip a coin to guess which way things will break Thursday morning. A look-to-the-left peak at 1142.75 (May 18) is still the number to beat if DaBoyz want to trap bulls and bears.

Bond futures now have active downside targets at 130^31 and 128^17.  December bond futures confirmed a new bearish pattern on the daily chart at the opening of today's session.  The pattern will remain in effect so long as its "C" point of 133^12 is not revisited, although the larger bullish trend in the bond market would make that an unsurprising outcome.  Indeed, the larger trend suggests that traders should buy the midpoint pivot of the new pattern at 130^31.  A bid at 131^01 with a stop at 130^28 would risk a hypothetical $156 per contract.  (Posted by Doug McLagan)  _______ UPDATE (2:25 p.m. EDT):  The futures made a low at 131^00, filling our order and then rallying gradually to as high as 131^14 before reversing sharply.  Traders had plenty of time to manage the position profitably.  The reversal broke through the midpoint pivot, suggesting that the "D" target of 128^17 will be reached and will present us with another trading opportunity.

Silver is regrouping below Wednesday's rally high, perhaps readying a bid for our 20.45 target.  On Wednesday, December Silver rallied to a high of 20.18, encountering resistance in the range we noted in yesterday's tout.  That resistance area will have been surmounted when a trade goes off at 20.22.  By contrast, silver would have to decline below its recent lows of 19.585, 19.505, and 19.32 in order to make 20.18 look like an important high.  The uptrend is intact, and its next objectives are the "D" target at 20.45 and the prior high of 20.80 from the summer of 2008.  (Posted by Doug McLagan)

Gold is near record highs and has given us some new short-term targets.  On Wednesday, after a pause at one of our pivots, December gold rallied through the first two targets that we highlighted yesterday.  The session high of 1264.7 was about six dollars below the all-time high for the December contract, but it was less than two dollars below the continuous contract high.  The rally sparked a violent battle in which the price gyrated up and down within a ten-dollar range.  The bears have held the market back for the time being, but the retreat is not yet enough to suggest that an important new downtrend has begun.  The day's trading cancelled the 1271.4 target mentioned yesterday, but we have a fresh short-term pattern whose midpoint is at 1263.3 and "D" target is at 1272.5.  Above there, our 1284.1 target remains in effect.  (Posted by Doug McLagan)