Friday, September 24, 2010

December Silver has blown past a Hidden Pivot at 21.170, suggesting that the conquest of March 2008's 22.055 peak will be easier than many might be imagining.  The thrust would keep the futures on-track to hit a very important target at 22.505 that I flagged here earlier. That's still my minimum objective, and it is sufficiently compelling that any significant progress above it would imply Silver is on its way to the moon. Even as we allow our bullish imaginations to be stretched, however, we'll need to monitor pullbacks on the lesser charts very closely, since we don't want to get trapped in a downdraft. At present, the first (very) small hint of trouble would come on a print at 21.105, since it would create a bearish impulse leg on the 5-minute chart.

Two days' worth of claustrophobic price action have merely rested bulls, not slowed them. There are numerous minor targets above, but we'll hold to the one at 1340.00 for now, since it's a Hidden Pivot with the potential to stop the rally for more than a few hours. Alternatively, December Gold would need to fall $30 today to even hint of trouble on the hourly chart.  However, if we use the 5-minute chart as a hair-trigger, it would take 1285.60 to raise the subtlest of doubts.

I've proffered targets w-a-a-ay below, but we'd need to go with the bullish flow for perhaps a short while if the Dollar Index pops today above 80.46, a look-to-the-left peak etched into the hourly chart Tuesday on  the way down. That would create an impulse leg surpassing no fewer than three prior peaks, but we shouldn't be too impressed, since it will have taken a day's worth of pumping to muster the charge.

The Dow is poised to fall to at least 10602, or to 10574 if any lower.  The calculations come from impulse legs that are less than stellar if subjected rigorously to our rules, but the patterns of which they are components are so pretty and compelling that it seems unlikely they could miss. A tradable bounce should therefore be expected at either pivot, but you'll be on your own if you want to improvise a bottom-fishing (or shorting) strategy. ______ UPDATE (1:57 p.m. EDT): The lunatics and broad-tossers are in charge today and have taken the Dow higher rather than lower. My minimum upside target is 10993, and it looks like a lead-pipe cinch because of the ease with which buyers obliterated its sibling midpoint at 10817.

Yesterday's whoopee-cushion decline overshot an 1124.75 target, suggesting there's more weakness to come.  A new Hidden Pivot at 1110.00 can now serve as a minimum downside objective (see chart), but I don't recommend bottom-fishing there because it coincides with a moderately important low recorded on September 15.  I doubt the support will hold for long in any case, and when it fails we should expect the futures to grope their way down to more substantial structural support near 1082.  ______ UPDATE (1:19 p.m. EDT): The futures have mistakenly headed higher today -- and with a vengeance, although, suspiciously, not with sufficient vengeance to surmount the week's peak recorded on Tuesday. _______ UPDATE (1:51 p.m. EDT):  The vengeance has ratcheted up a click, surpassing Tuesday high, so shorts will end the week with a gun at their heads.  Immediate targets are 1144.25 (exceeded by one tick so far); and thence 1148.50; and finally, short-term, 1152.25.  As always, the penetration of any of those resistance points by more than a few ticks will imply the next is likely to be reached.

(There’s a good reason why bullion traders and investors have nicknamed the COMEX the CRIMEX. Read Robert Moore’s essay below to see why.  Moore, a frequent contributor to the Rick’s Picks forum, says bullion bankers have leveraged the commodity exchange’s liberal rules to perpetrate a fraud that would land you or me in jail. RA) In 2004, two young men named Robert “Buddha” Gomez and James Nichols fleeced thousands of people to the tune of $21 million by selling them “paper” automobiles.  Here’s a link to more on this fascinating story by Car and Driver’s John Philips. These two hucksters swindled thousands of people into paying real money for nonexistent cars that were part of the fabricated estate of a fictitious, deceased eccentric millionaire, who declared in his will that these cars were only to be sold to “decent, churchgoing people” at unheard of bargain-basement prices as low as $1,000. If Gomez and Nichols had known what was good for them, they would have studied the COMEX gold and silver futures market a little more closely before embarking on their little adventure into the exciting world of fraud. We all know that a futures contract is merely a paper promise to deliver a quantity of bullion (or some other commodity) for a pre-determined price at some future date. This is analogous to the paper promise to deliver “miracle cars” at some future estate settlement date; and as long as the promise to deliver can be sold to a willing buyer, then the scam can continue in perpetuity. Gomez and Nichols’ scheme collapsed and they were both hung out to dry when the need to deliver real cars to settle these purchase agreements came due. In the gold and silver markets, by contrast, the scam is aided and abetted by a regulatory environment whereby the threat of