Wednesday, December 1, 2010

Silver's hourly chart should put the fear of the Lord in the bad guys' obsidian hearts, there being no brain to alarm.  I've also billboarded downside targets in the E-Mini S&P and E-Mini Dow that can be bottom-fished with tight stops if and when they are reached.

The futures were building steam early Monday morning for a run at 30.465, an important Hidden Pivot target whose provenance is shown in the chart. Midpoint supply near 27.760 had impeded bulls for nearly two weeks, but they finally appear to have chomped through it, leaving the bad guys with little but prayer to contain a potential price explosion. Decent camouflage came available on the hourly chart after the futures impulsed on Tuesday above the 28.245 peak recorded back on November 10.  Entry for a 29.280 target was at 28.250, subject to midpoint resistance at 28.600.

Bulls pulped the modest rally target I posted here yesterday, handily exceeding an important midpoint resistance that I'd flagged at 1380.20 in the process. This implies that the 1429.30 'D' target with which it is associated is in play. First, however, a lesser Hidden Pivot at 1393.90 that was discussed in the chat room and during the impromptu webinar must be surmounted. As of around 2:15 a.m. ET Wednesday morning, it had been exceeded  by 0.70 points, but I'd like to see a more decisive breach before I get excited.  Anything above 1397.00 today will re-energize buyers, since it would create a fresh impulse leg on the hourly chart.

A Hidden Pivot support at 1152.25 is equivalent to the Mini-Dow target at 10760 that I've recommending bottom-fishing in today's touts.  It will remain valid as long as 1206.00, the point 'c' of the pattern, is not exceeded to the upside. It should also be regarded as a minimum downside objective for the near term. _____ UPDATE (12:31 p.m. ET):  Stocks are on a bloody rampage today, short-squeezed dementedly from the opening bar on news that 93,000 "jobs" supposedly were added in November (about 160,000 shy of the monthly number needed over the next two years merely to recoup jobs lost during the Great Recession).  The squeeze has pushed the futures to a so-far high just above 1206.00, with bullish implications for perhaps the remainder of the year.  If the rally goes just a little higher today, exceeding the 1208.75 peak from November 12, bears should throw in the towel till 2011.

The 10760 correction target shown in the chart looks like a relatively safe place to try bottom-fishing later this week or early next, although the bounce we are implicitly expecting could come from as high as 10791 if the one-off 'A' rules. In any event, 10791 should serve as a minimum downside objective for the next 2-4 days. ______ UPDATE: Yesterday's rally invalidated the target, so we'll take this one off the board.

SLW is headed higher, potentially on a rampage in December to 41.65/42.37, but because a lesser Hidden Pivot resistance at 37.41 could temporarily chill the rally, we'll leave our defensive call spread untouched. To put it out of mind as well, let's adjust the cost basis of the 800 shares of stock we own upward to 14.27, giving us a paper profit of $18,000 on the position. We needn't worry about exiting the spread either, since exercise and assignment will cancel each other out if SLW is trading above 30 at expiration.  We should also plan to short eight December 30 puts if the stock falls after touching 37.41, since that would add nothing to our risk above 25. Let's be ready now with a g-t-c offer:  eight Dec 30 puts  @ 0.27. (They closed yesterday @ 0.11.) _______ UPDATE (December 6):  The stock has continued relentlessly higher without pulling back, so we never had an opportunity to short the puts. A small matter, though, since, at a current price of 40.56, the theoretical gain on our position is about $21,000.

Although it seems doubtful that Wikileaks impresario Julian Assange will go down in history as an okay guy, much less a hero, it would appear that he has ceased for the time being to be the object of a lynch mob.  When the first batch of leaks was published some months ago, it stirred up fears that America’s counterintelligence network would be irreparably damaged.  This time, however, the news media have been feasting on the leaks, even as their editorials have self-servingly played down the collateral damage the disclosures might cause. An irony is that the patchwork of international gossip divulged in recent days has provided insights into the world of diplomacy that make the news media’s coverage of the topic seem almost irrelevant. For instance, we’ve been reading for years about how Saudi Arabia feared the growth of Iranian Shiite influence in the Arab world. But compare that story with the Wikileaks bombshell that Arab leaders have been actively trying to provoke the U.S. into launching an air strike against Iran. Will publicizing this fact unbalance the geopolitical world?  Arguably not, since the Iranians would have known how the Saudis feel about them without using Wikileaks as a source. On the other hand, the leak is bound to change public perceptions of the issues involved, possibly forcing the hand of the aggressor. Since either side could be the aggressor here, one could infer that the chances of an attack have increased. A Hunted Man Meanwhile, Assange is indeed a hunted man, but this time it is TV news producers who have been trying to track him down, not Interpol or a torch mob. We wouldn’t rule out the possibility that he’ll turn up in Dancing With the Stars in 2011, especially if the most salacious details of the latest