Tuesday, December 7, 2010

If 30.465 is breached by more than three ticks, use the target at 31.545 as a minimum upside projection for the near term.  Easy camouflage opportunities for Monday night appear to have been exhausted with a signaled entry at 30.150 around 10:05 p.m. ET. A somewhat larger pattern projects to 30.680, and it should work fairly precisely, since the futures have stalled within a penny of its calculated midpoint, 30.305.  To locate the pattern, use a 5-minute chart, where A=29.605 (Monday, 1:20 p.m. ET).

I've used a little trickery to project higher targets for Gold above the obvious ones that remain on the daily chart.  The targets are not precisely shortable because they come from a composite chart. However, they should work just fine in providing a sequence of upside targets each of which will become likely to be reached once the one below it has been decisively exceeded.

A Hidden Pivot at 1439.70 is the next likely stop on the way up, and it should be expected to show some stopping power. Since we should always have a target in mind beyond the obvious ones, let's use 1472.60, a Hidden Pivot that comes from the daily chart, where A=1284.50. We are running out of compelling targets on the daily chart, but switching to a composite weekly chart yields a serviceable pair of pivots at 1512.20/1550.30 (see chart).  They are neither obvious nor intuitive but would be a legitimate entries on a target "matrix" comprising all ABC permutations on the monthly chart.

A rally target given here earlier has been superseded by a new one at 11474 that is equivalent to the one given in today's tout for the E-Mini S&P.  You can short it with a stop-loss as tight as six ticks.  Please note that, unlike the Mini S&P, this vehicle has already breached the midpoint resistance, 11380, implying the target itself is likely to be reached. _____ UPDATE: 11448 is as high as it got, so we did nothing.

Yesterday's rally, such as it was, died 1.00 point below the 1225.75 Hidden Pivot midpoint shown in the chart, but if it gets past the resistance today look for the futures to hit a minimum 1238.25. That's slightly below the target of a larger pattern we've been using to keep us properly bullish, but it's close enough to describe a cluster of targets that could show some stopping power.  Even so, because of the pernicious nature of the rally, I'd suggest using camouflage to get short rather than simply hanging out an offer at a 'D' pivot.  Officially, though, and to make it easier, we'll offer two contracts short at 1238.25, stop 1239.25.

Gold and Silver swept all obstacles aside Monday, pushing already steep rallies into hyperdrive.  Even a firm dollar failed to check the buying spree. At the opening bell, we were looking for Comex February Gold to surge to at least $1425; however, by day’s end it had done even better, rallying $24 to peak intraday at 1429.40.  And although March Silver fell 11 cents shy of our minimum projection of 30.465, there was such power behind the nearly $1.00 rally that the target seems all but guaranteed to be reached during the night session.  All of this must have come as bad news to technically oriented bears who saw a head-and-shoulders top forming in February Gold. Look at it now (in the chart below) and you’ll see that the last two days’ price action have transformed the pattern into chopped liver. We hesitate to break out the bubbly at this point, however, because the steep pitch of bullion’s ascent is manifestly unsustainable.  This implies that it won’t be pretty when the move swoons into a correction. Even so, in the days ahead, Rick’s Picks will try to provide Hidden Pivot benchmarks that long-term investors and swing traders can use to hedge bullish exposure in precious metals. We are somewhat exposed ourselves via an 800-share stake in Silver Wheaton (SLW) that was showing a paper profit of $21,376 at yesterday’s high, 40.99.  Our forecast has been calling for a minimum 41.65 in the stock, but it has gotten there more quickly than we’d expected, requiring a likely adjustment today or tomorrow. Still, certain widely followed gold stocks appear to have room to move, assuming a 622.78 projection for the Gold Bugs Index (HUI) materializes. The index topped yesterday at 591.71, driven by a 10-point rally, but the Hidden Pivot target at