Thursday, October 28, 2010

The December contract has two ABC uptrends driving it right now, one big and one small, so wheat traders should be looking eagerly for a place to jump aboard.  Full disclosure: I am not a wheat trader.  I HATE wheat futures.  The little S.O.B. hits its targets, but the path it takes is often vexatious, if not to say downright bamboozling. So I'll leave this one to you while noting that it looks possible to find camouflage on the hourly chart, so eager does this vehicle look to leap.  On the hourly chart, an entry signal was just tripped at 685.75, but the next will come on a breakout above a related midpoint at 706.50. _______ UPDATE (1:39 p.m. EDT):  The futures are currently at 716 after rallying as high as 721.75 earlier in the session.  If you caught the move, treat yourself to a Havana cigar, or take the Missus dancing.

With a thrust this week exceeding 78.70, DXY has the potential to create a robustly bullish impulse leg of daily-chart degree.  Assuming the rally eventually gets past that number, even though it wouldn't necessarily be a paradigm-changer, it would generate a bullish event that we could ill afford to ignore, much less disdain.

Silver has treated bears with such contempt lately that I'm not even going to bother putting out worst-case correction targets as I've done in gold.  Equivalent targets are in fact not there; moreover, the December contract was working on a bullish impulse leg Wednesday night with the potential to hit 25.440. First, however, a lesser (midpoint) Hidden Pivot resistance at 23.915 will need to be brutalized. And if the futures should achieve 24.510 today, creating a bullish impulse leg on the hourly chart, the bad guys had better step aside.

Assuming the December contract ultimately corrects down to our Hidden Pivot target at 1291.60, or perhaps even to 1278.70, we should remember that gold was down a whopping $15 on the day it was disclosed that QEII would be more like $200 billion than $2 trillion.  Thank heaven we were not privy to this information on Tuesday, since we'd have been sorely tempted to hock the family jewels to raise money to short precious metals with reckless abandon.  We'd also have been looking for a drop of $50 or even $100 in gold's price rather than the piddling $15 we got. For now, we'll continue to use the "soft" peak at 1358.90 to signal a resumption of the major bull trend, but otherwise the two targets given above will remain in play, the lower of them our very worst-case scenario for the foreseeable future.

It's discouraging to see the broad averages down so little when it appeared that the forces of sanity, decency and logic had bulls nicely on the run early in the session. Oh well. This vehicle ended the day with the creation of a strong impulse leg on the 30-minute chart (if not quite on the hourly), so we should brace for higher prices. If so, a midpoint resistance at 1180.75 should be considered "pivotal," since a breakout above it would portend more upside to as high as 1193.50. So far, however, the midpoint has with withstood the charge, turning the futures back from 1180.50.  Night owls looking for a way in should seek it on the one-minute chart, where subtlety and sideways tedium will have caused more than a few other traders to throw in the towel -- or doze off. ______ UPDATE (1:33 p.m. EDT):  Liftoff to a so-far high at 1187.50 came in the hour leading up to the opening, but the best time to have gotten aboard via camouflage on the one-minute chart was at exactly 4:50 a.m.  The pattern that took shape at that time is subtle perfection, including B and C coordinates formed from a single bar.