Monday, November 8, 2010

Natural gas might have made an important low recently.  After its major high in mid-2008, the price of the clean-burning fuel declined by more than 80% over a fifteen-month period.  A large bounce (in percentage terms) gave way to another downtrend which has lasted throughout 2010.  Recent price action raises the possibility that natural gas has made an important secondary low and that it might be ready to join the bullish party that most other commodities have been enjoying.  The futures are trading just below the midpoint (at 4.008) of a pattern which began with a powerful short-covering rally that peaked a week ago.  If the sibling "D" target of 4.274 is reached, additional prior highs will be taken out, and the recent low of $3.50 will begin to look very important.  Traders should watch for smaller patterns to provide opportunities to get long.  The "D" target might present a chance for shorting with a tight stop (probably no higher than 4.281), but if the futures get that high, traders should take seriously the odds that a najor new uptrend has begun.  (Posted by Doug McLagan)

Gold is trading a bit lower than it was when I published Monday's tout earlier this evening, and it may be due to the purely technical rally unfolding in the dollar at the moment. Check out the analysis for DXY if you want to get a better handle on the situation.

So far, Sunday night's five-point selloff in the E-Mini S&P looks almost as unconvincing as the one in Gold.  The futures are at the low end of an extremely tedious, seven-point range they 've been plying since early Friday morning.  The result is a sine-wave-of-a-snoozefest that has generated no impulse legs worth noting even on the lowly five-minute chart. My gut feeling is that the futures will need to hack and wheeze for another 2-3 days before they attempt to replicate the hysterical steepness of Thursday's QEII thrust.

In this short audio segment from The Korelin Report radio show, Rick discusses the election results and the potential effects of the recently announced $600 billion quantitative easing. Click here to listen.

The Dollar Index looks poised Sunday night to push moderately higher, to a Hidden Pivot resistance at 77.13 that was visible on all of the intraday charts.  So that we don't mistake a fake rally for the real McCoy, let's stipulate that DXY must shred two more peaks -- respectively, at 76.98 and 77.42 -- with an unbroken rally before we get excited.  Both can be found on the accompanying chart.

It's Sunday evening and Gold is down five bucks at the moment, but Silver -- ever feisty and up six cents -- isn't buying it.  Perhaps Bank of England is the seller of gold tonight, seeing if it's still got its old touch for unloading what few ingots remain in inventory at the worst possible prices?  Concerning December Silver's immediate prospects, we should use a Hidden Pivot target at 28.595 for now, predicated on a close above its sibling midpoint resistance at 27.235 -- 22 cents above the recent, recovery-record high.  The pitch of the implied rally looks too steep to sustain, at least to me, but it's possible nonetheless that buyers will arrive on the scene Monday morning gung-ho to take no prisoners.  Whatever happens, we should pay close attention to the price action at 27.235, since an obvious stall there will affirm the validity of the higher target.

Monday through Thursday, join me for a live pre-market look at bullion, index futures and whatever else is interesting in order to develop a trading plan for the day, particularly the opening hour. The focus will be on Hidden Pivot support and resistance points that show the most promise for trading with as little risk or stress as possible. Click here to register for these sessions.

(This week, Rick’s Picks will be featuring commentary from some forum regulars who for the most part are mad as hell and not going to take it any more. Today’s commentary is from Tom Waldenfels, a former broker and semi-retired management consultant who goes by the handle “fallingman” in the forum. Tom is skeptical, to put it mildly, that the recent election is going to change things. If the voters want real change, he says, it can only begin  with changes in the way they conduct their own lives. RA) I’m writing this essay a few days prior to the election, but I already know how the vote’s gonna turn out.  The new Congress will be composed of ... pause for dramatic effect … Republicans and Democrats. Doh! “Meet the new boss … same as the old boss.”  We just got fooled again. Yeah, the balance will have shifted some and many of the newcomers are unquestionably more honorable human beings than the people they’ll be replacing.  How could they not be?  But, as Doug Casey says, “Political power tends to attract the worst people … the four percent of the population that’s sociopathic.”  It ain’t like the Congress is goin’ all Jimmy Stewart on us.  We’ll be stuck with essentially the same crew and pretty much the same “leadership” in both parties that we’ve had, rump movements notwithstanding.  And how’s that arrangement been workin’ for us?  As we say in the south … “Not too good.”  Rome will continue to burn. Corporatism will continue to rule the day.  Promises will continue to be made that can’t be kept.  The Constitution will restrain no one.  Borrowed and newly conjured money will continue to be wasted on everything ranging from the merely idiotic and counterproductive to the truly criminal and completely