Friday, December 3, 2010

Palladium seems to have a following in the chat room, so I've included a chart today that projects an 800.85 target for the NYMEX March contract.  I've suggested that the likely outcome is a no-brainer because of the sinuous beauty of the rally pattern.  Camouflage will be tough to come by at this stage, however, because the futures have been on a tear for the last week. ________ UPDATE (October 28):  March Palladium in fact achieved 861 before succumbing to the summer's selloff in precious metals.  The recovery since, from a low of 535 earlier this month, looks healthy and promising, since the recent high of 683.70 in the December contract generated a fresh impulse leg on the daily chart.  Now, we'll need to look the pullback from that high to assess bulls' staying power.

Is the euro about to turn higher?  We'll be better able to answer that question when we see the rally interact with 1.3306, a Hidden Pivot resistance that can serve as a minimum upside objective for the near term.  I have included a chart that shows the target because the pattern it's associated with is very unintuitive. It's not an ideal place to try shorting, however, due to its close proximity to the November 9 peak at 1.3301. _______ UPDATE (12:26 p.m. ET): The futures blew past 1.3306 effortlessly, suggesting this rally will continue into next week, at least.

The rally is getting close enough to the November 9 peak to taunt it despite a news environment that has offered little in particular to catalyze a strong move. If Silver takes the inevitable leap past 29.405 today with a flat dollar as backdrop, the target at 30.465 given here earlier will become an odds-on play for the near-term.  And if that Hidden Pivot shows little stopping power, look for the rally to continue to at least 31.545.  Look for camouflage opportunities on the two-minute chart, referencing a look-to-the-left peak at 28.955 as perhaps the last "easy" spot to board. ______  UPDATE (12:24 p.m. ET):  Helped by a weak dollar, the futures pushed to within a few pennies of the 29.405 peak. This is not the most bullish action we could have imagined, but it does keep the futures well on-track for a run at the two targets given above.    

A peak at 1411.70 recorded November 11 on the way down is still the number to beat, but bulls showed zero energy yesterday for taking it on. Camouflage artistes and night owls can use a lesser resistance at 1393.70 to get long, ideally off an ABC pattern similar to the one shown. _______ UPDATE 12:19 p.m. ET):  The first rally to poke above 1393.70 occurred a little after 4 a.m., and although entry at X (1393.59) would have gotten one to the 1394.00 midpoint for a tiny gain, it did not catch the big rally that was to occur  four hours later off a 1387.00 low. That one was so wicked that only luck would have gotten you aboard using a buy-stop-limit entry.  The extremely devious action of gold futures is bullish to the extent that it is making it almost impossible for bulls to find an easy way in.   

DaBoyz kept bears on the run for a second straight day, presumably locking in their edge for the remainder of the year.  Look at the accompanying chart and see if you don't agree that a minimum 1240.00 is in-the-bag. It's hard to predict what kind of cat-and-mouse price action will obtain once the futures top early November's key structural highs near 1225.00, but any attempts at boarding via camouflage will be more perilous than usual -- though perhaps less so if attempted prior to the breakout.

Our friend and colleague Sean Rakhimov, editor of SilverStrategies.com, is an astute observer of the silver scene, as well as a charter graduate of the Hidden Pivot Course. In the essay below, Sean explores some of the reasons why silver will be increasingly in demand in the years to come, especially by sovereign and institutional buyers. He writes as follows: Over the last several months, we have been pondering if governments will come into the silver market. Before we get into that, it is important to note that governments are very different animals and that there are over two hundred of them out there. Therefore, it is a very liberal generalization to lump them all together as if their needs, objectives and agendas were the same.  Expecting them all to act in the same fashion for the same reasons is a big stretch. That said, it's the stigma, the psychological effect, the sentiment and the message it would send to markets that prompts us to group them together in investors' minds as a market force. This same topic has been argued in the gold space for several years and now it has come to pass that central banks worldwide have thrown in the towel and became net buyers of gold. Should it be different for silver? By the way, did you notice, how silver silently became mainstream again, and more and more headlines now read "Gold and Silver..." whereas only a couple of years ago silver was nowhere in sight of anyone except the dreaded silver bugs. Much has been made about "manipulation" in gold and, particularly of late, in the silver market. Scores of articles have been written on the subject, and things got as far Washington , D.C., where the CFTC held hearings on the subject. We don't