Wednesday, February 2, 2011

A Hidden Pivot target not far above, at 12484, is as clear and compelling as the 1356.00 target we're using for the E-Mini S&P.  And just as the crystal clarity of the target inclines us to treat it with skepticism each step of the way, we'll plan on shorting it aggressively if it should be reached.  Keep in mind that the Hidden Pivot midpoint -- in this case 11684 -- is always going to be in play either until the target is reached, or point 'C' (10930) is exceeded to the downside. An implication of this is that a 350-point plunge to the pivot would not necessarily be bearish.

I've looked at a bigger picture than usual in today's touts for Gold and Silver.  The latter looks better than the former and presumably will lead the next charge.  My analyses hinge on the concept of "dueling impulse legs," a chart dynamic that in Gold's case has yet to occur.

Gold's chart is so anemic relative to the one shown in today's Silver tout that it could almost be described as divergent. Specifically, the short but powerful bearish impulse leg created by Monday's low has yet to be answered by a bullish impulse leg even on the hourly chart, let alone the 480-minute chart displayed in Silver.  A pop today exceeding 1354.00 would enhance an already moderately bullish short-term picture. Indeed, we should expect it, since flux surpassed a 1342.00 midpoint associated with a rally target at 1360.30 (previously noted).

The bearish impulse leg created when the March contract plunged to 26.300 on Monday has been roughly neutralized by the subsequent bounce. While the selloff took out a major low  at 26.475 recorded around Thanksgiving, the rally since has racked up two external peaks of lesser degree.  This is what I refer to as dueling impulse legs, and although the burden of proof at the moment rests with the bulls, the action of the last several days is encouraging.  A key event could be a test of a midpoint support whose location has yet to be determined.  It would follow a rollover from current levels, referencing peaks #3 as 'A'; #1 as 'B'; and a still undetermined 'C'.  Most bullish of all would be an upward push exceeding the two labeled peaks.  If the thrust is unbroken between peaks #3 and #4, that would imply Silver is on its way to a major Hidden Pivot at 32.525 (A=25.050 on November 16).

Tuesday's weakness smashed two of the three bearish targets given, so we'll assume that the third, 76.62, is dead meat.  Because the downtrend is displaying such vigor, I've used a 240-minute chart to determine how much power might remain.  The pattern shown projects to 74.08, and that is the number we shall use as a minimum downside objective, looking out perhaps 8-12 days.  However, if this forecast is going to be literally upended, it will be signaled by a breakaway thrust above the 77.76 midpoint.  We will naturally want to keep a close eye on that number in the days ahead.

Okay, here's the plan. Now that the S&Ps have whipsawed their way to fabulous new recovery highs, we are going to be triply cautious instead of treating our 1356.00 target as though it carried an ironclad, money-back guarantee.  Why so?  Well, try to imagine how many hosers would be caught with their pants around their ankles if the broad averages were to go into a horrific dive right now, after they've seemingly weathered headline global strife with flying colors, serenely oblivious to any and all dangers save perhaps the closing of the Suez.  As a practical matter, we'll plan on shorting the bejeezus out of 1356.00, assuming the  futures get there.  We will have to do so using camouflage, however, since the target may be too well-advertised by now to give us an "exclusive."  To effect a timely signal, I'll post the trade in the chat room first, and then via an update to the E-Mini S&P tout itself.  The signal could come later this week or not at all, so you'll need to be alert.  More immediately, the March Mini was noodling around just off Tuesday's highs, but the only decent "camo" opportunity -- a midpoint buy at 1300.25 the came at 6:15 p.m. EST on the five-minute chart -- is past.

In a report just sent to his clients, our friend Chuck Cohen says "Gold share bottom coming into view.  Be prepared to take action!"  For the full report, click here.  And if you'd like to receive Chucks reports directly, or to inquire about his consulting services, click here. .

[Turns out the Middle East is not the only place on earth where trouble has heated to a  dangerous boil. Superhot gases have recently caused miles of ground to swell dramatically beneath Yellowstone, reminding us that Nature could end life on this planet far more swiftly than any man-made conflict. Even a hydrogen bomb would be a firecracker in comparison to an eruption of the Yellowstone caldera. Which brings us to the essay below, written by a friend of ours with a keen interest in prophets and seers. At least one of them predicted long ago that 2012 would see a spectacular increase in seismic activity, potentially affecting hundreds of millions of lives. This essay originally ran in May, but with Yellowstone’s supervolcano unusually active, we thought it would be a good time to repeat it. Our friend also notes that “the drumbeat of prophecies clicking over is also picking up pace - watch England for potential violence involving the Royal family in the lead-up to this April's royal wedding; Tunisia is only the first North African country to experience destabilizing revolution and Algeria and Morocco could well follow in the year ahead; and watch the Catholic Church as a schism may unfold there as well. “On the economic front, the next leg down in the economy is also due to start this year, and the worst of what will turn out to be this Millennium Depression is still ahead of us. Yes, we have begun the second decade of the new Millennium. 2011 may well be the last year the world at large will not be at a state of world war - for decades to come. I hope the prophecies are wrong, or maybe my interpretation of them is flawed - but that is what my studies of prophecies