Thursday, November 11, 2010

December Gold is aiming for 1367.9 so long as it remains below 1410.0.  The futures have active patterns pointing both up and down, with 1367.9 as a buyable dowside target (with a stop at 1366.9) so long as 1410.0 is not revisited.  If it is, we will be left with no confirmed bearish targets, and the major objectives will all be in record territory, 1431.6 coming first among them.  (Posted by Doug McLagan) _______ UPDATE (2:10 p.m. EST):  1410.0 was surpassed by a rally that peaked at 1417.6.  As the futures declined from there, a new version of the bearish pattern was confirmed and was noted in the chat room and in the webinar, albeit with some caution.  But the futures bounced at the exact midpoint of the new pattern and rallied more than eleven dollars.

Crude oil is approaching a longstanding target at 89.88.  December crude oil futures have traced out a very elegant pattern from a starting point at 75.10, visible on the weekly chart as a simple, classic form.  The "D" target at 89.88 is near enough to the round ninety-dollar number that it is probably not wise to trade the pivot with a tight stop entered ahead of time.  Traders should watch the market as it approaches $90 and use hidden pivot techniques to identify and short a downturn there.  A reversal near the pivot that does not quite touch 90.00 should be strongly preferred.  (Posted by Doug McLagan)

Gold and Silver are both trading moderately higher early Thursday morning even though index futures are down by a few points.  It should be interesting to see whether this unusual divergence survives the opening. _______ UPDATE (7:59 a.m.):  There was a time when the bad news from once-mighty Cisco would have knocked down the Dow by 150 or more points.  However, with stocks in the presumptive late stage of the Mother of All Bear Rallies, it seems DaBoyz are barely able to shake down the Dow for a measly 50 points on the news.

The rally off yesterday's low got past an "external" peak on the 30-minute chart, but it failed by a tick to exceed the second that we require to signal a bullish impulse leg.  Ordinarily I'd deliberately overlook this sign of weakness because I have come to forecast higher prices for this vehicle more or less habitually each day. (Does it ever go down??)  For a change, though, and to help break a bad habit that could eventually lull me into complacency at the wrong time, I'm going to focus on a bearish target at 1194.00.  Shown in the accompanying chart, it can be bottom-fished with an 1194.25 bid, stop 1193.50.

The futures overshot the 26.710 midpoint support shown in the chart, implying more downside at least to its 'd' sibling, 25.250.  The target, as well as the short-term-bearish outlook, would be negated by a print today exceeding 28.195, since that would create a promising impulse leg on the 30-minute chart.

(Today’s guest commentary is from our friend V.R., a management consultant who incidentally was a student of ours before the term “Hidden Pivot” was coined.  Some may find his essay heavy going at times, but the reward for bearing with it, as your editor has found, is that you will have a better understanding of why complex systems, most particularly political and economic, fail.  Not all of them do, for sure, and V. elucidates the factors that can make the difference.  RA) Process Management appeals to companies that recognize its value.  Essentially, it is a scientific approach to managing  because, like all science, it is based on empirical measurement.  As we have learned in life, there are many ways of measuring things, and the less concrete they are, the more we dither over them and risk bringing progress to a halt.  This is especially true of politics, where hyper-emotional debate very often obscures the underlying issues.  In the corporate world, the ability of a firm to sustain and grow its business is related to its ability to stay on course despite changes in personnel,  market conditions and on stormy seas.  Carnegie Mellon institute is a leader in defining the software development process.  They created something called the Capability Maturity Model, or CMM, which uses a 0-5 scale to determine how well software companies use best practices to ensure the sustainable quality of their product or service. This ties directly to the sustainable efficiency of their profit-making efforts.  For example, a company rated “zero” uses ad hoc, shoot-from-the-hip means to accomplish things more than a level-5 company, and uses more subjective means of ‘measuring.’  This leads to less concrete operating methods, poor perceptions and an inconsistency of approaches.  Level-zero companies also waste effort developing their capabilities because they oversimplify the demands of