Tuesday, September 28, 2010

There's an easy rally target at 1.3742 to use as a minimum upside objective for the near term, but it seems doubtful bulls won't go the extra inch to refresh themselves with a thrust above dot-like pockets of resistance visible in mid-March and mid-April.  If that's what happens, it'll be telegraphing yet more weakness in the U.S. dollar.

We'll book a $266 loss in order to get this trade -- long two October 101 puts @1.33 -- out of our face. It was a pipe dream to think the broad averages might actually fall far enough to turn 101-strike October puts into winners, but at least we didn't jump on the erstwhile opportunity when the puts were trading above 5.00, as they did in late July. There's still a bid for the puts, so I'll record an actual trading loss of $218. That's assuming we blow them out for 0.24 apiece.

A textbook-lovely target at 1179.50 seems far too ambitious at the moment, although I'd need to rethink my skepticism if the futures were to close above it sibling midpoint at 1148.50 today or tomorrow. The pattern is shown in the accompanying chart, and if it were, say, Comex Gold rather than an equity index, I'd have no problem with 1179.50. Bottom line, we'll go 100% with the indicators this time rather than the gut.

Although Silver is getting hit in after-hours trading, Gold is hanging tough, at least so far.  Still, I doubt that the so-far early-evening low at 1293.10 will hold, since that's fully 80 cents below a midpoint support associated with a 'd' target at 1290.90. That's my minimum downside target at the moment, and because it was also an important resistance on the way up, it'll make a logical place to try bottom-fishing. You should do so via camouflage on the lesser charts, however, since 1290.90 is closely coincident with a too-obvious low at 1290.60 on the hourly chart.  _______ UPDATE (3:50 am. EDT): I'm not sure whether tonight's 1276.20 low is real, since it shows up as a single-bar swoon even on the one-minute chart. If it is indeed genuine bulls should take heart, since it demonstrates that the sleaziest sleazeballs in the commodities world are buyers of gold now if the price is right.

We're short a single contract from 21.870 after adjusting its cost basis by the amount of a partial profit booked yesterday at 21.400. That's where I recommended covering half the position via an update posted at around 10:23 a.m. I then suggested using a stop-loss at 21.515, but the futures never got any higher than 21.505. The stop was to have been O-C-O (one-cancel-other) with a buy-stop at 21.310, but that last number was not reached until after hours -- the overnight low so far. For now, use a  21.490 stop-loss, but lower it to 21.435 if and when 21.250 is reached. ______ UPDATE (7:54 p.m. EDT):  Moments after I wrote the above, Silver got pounded down to a new low of 21.250. That's an exact Hidden Pivot (15m, A=21.615 at 8:30 a.m.), but so far the bounce is less robust than we might have expected.  The next Hidden Pivot below is 21.225, and that is my maximum downside target for the time being.  Use a 21.435 stop-loss until it is touched, covering at 21.230 otherwise.  If you are short more than a single contract at this point, I'd suggest holding a small piece of your original position for a potential four-bagger. _______ FURTHER UPDATE (3:37 a.m. EDT): We covered the remainder of the position at 21.230 for a theoretical gain of about $3200 on a two-lot position.  The futures have traded down to 21.060 so far tonight, but they could go lower, since there's an unfulfilled Hidden Pivot target at 21.005. If you had a piece of the short trade, you can risk five ticks bottom-fishing with a 21.010 bid, stop 20.985.

Yesterday’s forecast in Comex Silver caught the high of the day within a single penny, in theory allowing Rick’s Picks subscribers to short the December contract moments ahead of a 28-cent plunge. Here’s the analysis and advice exactly as it went out Sunday night:  “We’ve been focused on an important target at 22.505.  That’s a Hidden Pivot, and I have suggested using it as a minimum upside target. However, there is another significant Hidden Pivot at 21.635 with potential stopping power, and so I’m going to suggest extreme caution if and when the futures get there. The provenance of  this target is shown in the accompanying chart, and you don’t need to be a Pivoteer to understand why it deserves to be closely watched.  Scalpers can attempt shorting with a stop-loss as tight as 10 cents.” Subsequently, when the futures did indeed fall from an intraday high of $21.645, we advised covering half the position at a price that turned out to be pennies from the intraday low. Here’s the update exactly as it was appended to the original trading “tout” at 10:23 a.m. EDT:   “Having topped this morning a penny above the 21.635 target, the futures have since fallen 25 cents. Cover half of any short position now and use a fixed stop-loss at 21.515 for the rest. That’s where the 3-minute chart would turn bullish again. My minimum downside target for the very near term is 21.310, but at that point you should check back for further instructions, since we may want to implement a stop-loss based on the creation of an impulse leg on the lesser charts.” As things turned out, the futures traded no lower than 21.365 intraday, meaning that we ended the day hypothetically still short a single contract, based on an initial two-contract trade.  On paper, the position profit thus far