October 2010

Silver was showing a bit more pluck than Gold shortly after midnight Tuesday EDT, resisting the exhortations of sellers to simply roll over.  A midpoint support nearby at 23.980 beckoned nonetheless, but that would likely be the worst of it if bids are pulled to bring prices down.  For your information, and to be prepared for the unlikely, the 'd' target associated with that midpoint is 23.450.  ____UPDATE (10:14 a.m. EDT):  Good thing we were ready, since, once silver cracked the midpoint support, it slid all the way down to 23.455, a half-cent from the 'd' target given.

The futures rebounded from yesterday's bottom with a bullish impulse leg of hourly-chart degree, but buyers were showing sign of fatigue shortly before after midnight EDT Tuesday.  The slippage is slight so far, but it still has a few dollars to go before support comes available at 1363.70, a Hidden Pivot midpoint associated with a 'd' target at 1351.80.  Another such pair of supports, but of larger degree, lie at 1359.00/1342.40.  Although an upthrust touching 1377.10 would make all of those numbers moot and put bears on the run, if the futures continue to ease we should take note of the quality of support at each of the four Hidden Pivots.  As always, an easy breach of one would imply the next is likely to be achieved.  Officially, we hold two contracts with a cost basis of 1353.30.  Our price objective is 1380.00, where we'll plan on selling one contract if the opportunity should arise. For now, both contracts should be stopped at 1362.10.  _______ UPDATE (10:05 a.m. EDT):  Just before gold plummeted at dawn, we exited our position on a stop for a theoretical gain of around $1800.  Although the futures overshot our lowest target, the selling has yet to breach a single prior low of daily-chart magnitude.  The first lies at 1325.60, $7 beneath the so far intraday low, and the second at 1297.00.  Both would need to be exceeded -- today -- before we need infer that something more than a minor shakeout is occurring.

Here in Colorado, it’s especially difficult to escape the vitriol and mudslinging of Campaign 2010. The closely watched Senatorial race between Democrat Michael Bennett and Republican Ken Buck has attracted a torrent of out-of-state money, and it sometimes seems as though all of it, a reported $750,000 a day, is being used to finance the attack ads that have come to dominate the local airwaves. Elsewhere in the country, it’s the same unpretty story -- no doubt in part because Democratic candidates would rather not talk about, much less defend, President Obama’s heavy-handed initiatives. Thus, in the last few days alone do we find one Republican smeared with the charge of rape, and another, Rand Paul, accused of having tied up a woman 30 years ago and commanding her to worship a false idol. If you’ve been following the news, you know we didn’t make this up. Even the President got into the slimy, suppurating spirit of things recently, accusing the U.S. Chamber of Commerce of taking foreign money to back right-leaning candidates.  But even the New York Times wasn’t buying it -- nor, apparently, was anyone else -- and it now appears the mainstream news media is simply going to let the issue die before their Anointed One makes even more of a fool of himself. And yet, putting aside all of this toxic sludge, we find ourselves positively excited about the possibility there's a revolution brewing and that actual political change could occur as a result of the election.  Yes, we know, it doesn’t much matter whether the country elects Republicans or Democrats -- the long-term results will always be roughly the same.  But when we talk about revolution, it has less to do with changes in the political make-up of the House and Senate than with vastly larger changes

Amidst what looked like phony selling in the index futures Sunday night, the Dollar Index was continuing its surge off Friday's deftly engineered low.  I've laid out criteria for turning bullish on the dollar in today's tout, so take a good look at the chart that accompanies it, set your screen alerts where I've indicated, and enjoy the show.

After feinting lower on the opening Friday, DXY trampolined powerfully, getting a running start at the first of two resistance peaks it will need to surpass to kick off a decent technical rally.  The accompanying chart shows the peaks in the perspective of the daily chart, and the rally past them would need to be unpaused once the Dollar Index crosses the "starting line" represented by the lower of the two.  However, if the rally dies somewhere between the peaks, then pulls back for a successful surge past the second, that would diminish the implied strength and probable longevity of the bull cycle (assuming it goes far enough to qualify as such). It does not bode well for bulls that the most recent ABCD downtrend achieved the 76.15 target I'd flagged with a tick to spare.  That's because strong bull trends, even incipient ones, typically produce pullback abc's that go no further than their c-d midpoints.

The extremely bullish, $315 target that I touted here five weeks ago, when the stock was trading in the low $260s, implied a 20% rally, but I didn't expect it to unfold with such speed.  Goosed by a runaway Google on Friday, Apple's rally has now gone parabolic. However, we can afford to sit tight and wait for the stock to return to earth, since our butterfly spread exposes us to a maximum risk of just $40 (versus a potential gain of as much as $2000).  For now, do nothing further.  We are long the November 300-310-320 'fly twice, and the maximum payoff would come if AAPL is trading around 310 when the November options expire.

The futures are off the equivalent of 60 Dow points late Sunday night, but the selling so far is well within Friday's range and looks contrived to shake down widows and orphans.   A midpoint Hidden Pivot support at 1167.25 has contained the selling so far, but if it gives way, that would open a path to as low as 1159.00, a hidden support that you could bottom-fish with a stop-loss as tight as three ticks. The trade will likely work best for night owls, though, since too much noodling around on the C-D side of the pattern is apt to queer the "Hidden Pivot effect." ________ UPDATE (10:25 .m. EDT):  Our trade never triggered, since Da Sleazeballs could push the futures no lower than 1164.75.  This telling weakness in the faked weakness set up a a moderate short-squeeze rally overnight.  So far, it has pushed the December contract as high this morning as 1178.25, but some back-pressure will need to build up before this hoax can vault the three peaks near 1180.00 that were recorded last week.

It's late Sunday night, and the futures have bottomed precisely on a 23.715 Hidden Pivot support equivalent to a target given this evening for December Gold. However, Silver's bounce looks anemic, and I don't expect the low to hold.  In any event, bulls would needs to push the futures above 23.950 to turn the (very) lesser charts bullish; otherwise, the December contract could grope its way down to as low as 22.945 -- last week's bottom -- in search of structural support. _______ UPDATE (10:12 a.m. EDT):  The Hidden Pivot support at 23.715 survived the night, giving way to a 60-cent rally. Now, it'll take a print at 24.550 to run it up the bad guys' ol' wazoo.

It's Sunday night, around 10:34 p.m. EDT, and sellers are attempting to drive the futures down to a correction target at 1353.30. That's a Hidden Pivot support, and you can try bottom-fishing there with a 1352.80 stop-loss. If the stop is hit, consider it a warning of more weakness over the near term -- presumably to at least 1349.00, a Fibonacci-based support from the hourly chart.  Looking at a somewhat bigger picture, a 1415.40 rally target given here earlier will remain valid unless 1325.60 is exceeded to the downside. _______ UPDATE (10:29 a.m. EDT): My 1353.30 target caught the low of a so-far $18 bounce within a dime, so even if you used a stop-loss as tight a two ticks, you got on board safely.  If you initiated the trade with a multiple of four contacts, keep 25% of the original position for a potential home-run.  Single-contract longs should use a 1362.10 stop-loss for now, o-c-o with a 1380.00 objective, since a print at the former is where a bearish impulse leg would be signaled on the 3-minute chart.  Officially, I'll track a two-contract long for your further guidance, with one of the contracts stopped as above, o-c-o.