We risked bupkus on the way down yesterday — a day that should have held few surprises for Rick’s Picks subscribers, since we began it with a quite bearish target and a headline that read ”Bullion correction has further to go”. Skittish investors may want to notice that the entire decline so far, from the November 9 record high at 1424, has yet to exceed even a single “external” low. It will take further selling down to at least 1315.50 to accomplish that and create a bearish impulse leg of daily-chart degree. In the meantime, we’ll move to the sidelines, since the value of any Hidden Pivot supports immediately below will be compromised by the close proximity of a key structural supports at 1325.50 and 1315.60.
From the monthly archives:
November 2010
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The focus remains on a 25.250 correction target first broached here a while back, and it can be bottom-fished with a stop-loss as tight as three ticks. (Please note: The slightly-wider-than-usual stop-loss is intended to encompass an alternative target at 25.240.) Silver needn’t have done anything particularly impressive yesterday to overcome the drag of this correction, but it failed by two ticks nonetheless, adding weight to the downside target. SIZ will have another chance to turn things around, though — with a push above the benchmark given here yesterday, a structural peak at 26.480. _______ UPDATE (10:49 a.m. ET): The forecast got the magnitude of this sell-off right, at least thus far, but the so-far low at 25.220 overshot our target by three cents, stopping out longs tied to a 1.5-cent stop-loss. Now, we should use a Hidden Pivot support at 24.855 as a minimum downside objective. (60m chart, A=27.300 on 11/12; B=25.700 and C=26.455).
The mildly compelling Hidden Pivot target at 1338.10 shown in the chart implies that lower prices are coming, especially since its sibling midpoint support at 1357.30 evinced little discernible support. The target can be bottom-fished with a stop-loss as tight as 1337.40, but if it’s hit expect the key structural support at 1325.50 to turn magnetic. _______ UPDATE (11:42 a.m. ET): The futures have traded as low as 1332.00 so far today — down more than $36 at that point — stopping out our bottom-fishing foray quickly and, one hopes, relatively painlessly.
The Hidden Pivot support at 1184.75 where I’d suggested bottom-fishing yesterday is still valid, so let’s try again using the same 1.00-point stop-loss that was originally advised. You could try once more at 1177.25, stop 1176.50, if the trade fails, since that’s where the futures will likely be seeking another opportunity to bottom. _______ UPDATE (10:10 a.m.ET): This one hit a dead-center bullseye. The futures came down to exactly 1184.75 on the opening, then rallied 4.25 points to 1190.00. Since we used a three-tick stop-loss initially, partial profit-taking and/or the implementation of a can’t-lose trailing stop was implied at 1187.00, nine ticks above the entry. The futures subsequently made a secondary low at 1184.50, but because the move down created no new impulse legs of even minor degree, you could still be holding some contracts at your discretion.
A decline to a Hidden Pivot support at 83.58 over the next couple of days should be viewed as an opportunity to bottom-fish with a stop-loss as tight as 10 cents. Camouflage aficionados should look to get short ahead of the decline if the futures rally to 84.67, the c-d midpoint of the pattern associated with our bottoming target. _______ UPDATE (9:43 a.m. ET): Both the short and the long would have worked beautifully, since the futures topped at 84.74 — 7 cents from the midpoint support I’d flagged — before heading into the tank. Along the way, they took a 41-cent bounce off an interim low at 83.56 that lay just two ticks beneath the hidden support I’d flagged. Now, like just about everything else that is traded on some exchange, they are falling anew — bound, presumably, for an 82.47 HP support. It too can be bottom-fished with an insanely tight stop-loss if yolu please.
With yesterday’s seemingly tireless rally, the Dollar Index pushed past a third prior peak on the daily chart without having paused for breath. This created an ostensibly bullish impulse leg; however, for the time being I will treat it as a trap rather than as technical evidence that pigs can fly. From here it will take a stiff pullback to terminate the impulse leg, given the dramatic length of the k-A segment. In any event, we’ll move to the sidelines, whence we can judge the dollar’s prospects with cool detachment.
Time for a reality check in bullion – and in the dollar while we’re at it – since anxiety about the price action in both seems to be rampant these days. The latter, as represented by the NYBOT Dollar Index, exceeded a bullish trigger price of ours yesterday by 0.02 points, causing some gnashing of teeth in the Rick’s Picks chat room. Gold and silver investments are quite popular in this forum, to put it mildly, and signs of strength in the dollar, however faint, are usually seen as threatening. Before we get upset about the prospect of a resurgent greenback, however, let’s consider why it has been rallying in the first place. Quite obviously, this has been a response to rumblings in Europe, where Ireland and Portugal have recently re-emerged as the financial basket-cases-of-the-month. We’ve seen this movie before, though, and that’s probably why the U.S. dollar’s » Read the full article
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Global Panics Just Not What They Used to Be
by Rick Ackerman on November 17, 2010 2:16 am GMT · 30 comments
In a perfect world, the Dow might have plummeted 500 points yesterday while gold and silver took flight like bats out of hell. Oh well. Sometimes you just have to take what you get. And what we got was a merely moderate selloff in the broad averages accompanied by commensurate weakness in bullion. Actually, weakness was the story across-the-board, affecting nearly all classes of investment assets. The disinterested observer might have inferred that traders and speculators around the world (investors have become extinct) were strongly in sync, spooked by China’s apparent desire to rein in growth, but also by the re-emergence of critical financial problems for Ireland and Portugal.
Assuming investors were indeed of a more or less singular mind – and my apologies if the use of the word “mind” here has offended anyone — it’s a bloody wonder that U.S. stocks didn’t get pulped. But they didn’t. And although sellers seemed to have had little trouble pushing the Industrial Average down by 200 points, the index seemed hostile to the prospect of giving up any additional ground. At its intraday lows, the Dow was down around 223 points; but most of the day it hovered well above the lows, down 180 or so points (which is where it closed). Some might have sensed the hand of the Plunge Protection Team in preventing a rout. Perhaps. But who needs a PPT when just a small trickle of liquidity from a glutted banking system can propel shares skyward on any given day? And let’s not overlook the fact that, other than Kudlow, there are no individual investors in the stock market any longer – only institutional hacks charged with deploying OPM to stay weighted in stocks, even if the earth should open up and swallow Manhattan, Chicago and a few other money centers.
Over Before It Began
Meanwhile, and as we’ve come to expect, most of the ground lost by U.S. shares was lost in the opening minutes of the session, making it very difficult to profit from the move unless you’d gone home short the night before. From a trading perspective, the day was mostly over before it was two minutes old. Permabears should keep this in mind if they expect to reap windfall gains when the stock market finally does the Right Thing and collapses in epic fashion. It’s going to happen so quickly that the event so many of us have been awaiting…nay, expecting…since 1987 will pretty much be over before we’ve gotten out of bed.
Preparing for the Big One becomes even more complicated when you realize that the reasoning behind yesterday’s selloff was rubbish, as it so often is. The conventional wisdom had gold and silver falling because China is talking about dampening inflation. But who cares about inflation at the relatively trivial level of manufacturing, exports and domestic consumption when hugely larger forces – namely a quadrillion-dollar financial shell game – are at play, threatening to expose the world’s currencies as worthless IOUs? Our advice is to hold onto your gold and silver while the imbeciles and bad guys who control the markets duke it out, second-guessing each other to the point of exhaustion. Nothing has changed, really, and whatever assumptions we were operating under just a few short days ago still obtain.
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