Thursday, February 24, 2011

Late Wednesday night, Silver was hesitating after an impulsively bullish thrust of nearly 80 cents earlier in the day. To keep the bad guys on the run, the March contract will need to refresh the bullish impulse with a pop above the  33.985 look-to-the-left peak shown in the chart.  As of this moment, there did not appear to be any compelling opportunities for night owls on the lesser charts.

Hidden Pivots aside, April Gold faces crucial resistance at 1426.30, the lowest of three important peaks recorded since November. Night owls looking for a way to board using camouflage should go to the 10-minute chart or lower and apply the entry rules with mechanical detachment. If Gold is about to head higher, we should see minor, downtrending abc patterns reverse from their c-d midpoints.

We'll set aside some promising rally targets at 376.84 and 383.50 for now, since Apple's selloff has gone impulsive on daily chart.  It's too early to assume The Top is in, but we'll know more once we've seen the C-D follow-through play out to, or perhaps beyond, its midpoint.

Both major and minor downthrusts have consistently failed to produce Point 'B' lows that exceeded some obvious external low.  That is the same as saying they have been "sausage," with the implication that any bearish targets derived thereof will not be as reliable as those produced by "legitimate" impulse legs.  That said, the visual logic of the pattern shown yields a passable target at 76.15, and it is that Hidden Pivot that I will suggest using as a minimum downside objective for the near term.

We were nicely ahead of the plunge yesterday during the weekly tutorial session. Now, our focus should be on the C-D follow-through leg once a retracement high has been made.  Even with a bearish bias, we should look to bottom-fish at the 'p' midpoint of a pattern like the one shown. ______ UPDATE (10:57 a.m. EST):  A pattern much like the one shown did indeed develop, but the futures overshot its 12038 midpoint by 34 points.  This implies more weakness ahead, notwithstanding the presumably phony, 110-point bounce that has occurred this morning from the lows.

The downtrend is now impulsive on the daily chart, having taken out a second "external" low at 1308.50 with yesterday's moderate decline. The move will now either accelerate -- or recoup the losses before bears know what's hit them.  My gut feeling is that the former is about to occur, a Hidden Pivot feat that would become serious with a print this week or early next below the 1262.25 bottom recorded on January 31 during a nasty swoon. Alternatively, buyers need only push this vehicle above 1334.50 today to reclaim the advantage.  The significance of that number is shown in the accompanying chart.

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I stuck my neck out here yesterday, calling the top of a bear rally that for two years has kept the nation from facing economic reality. Here is what I wrote: “Stocks fell not because of fears over the spread of violence in the Middle East, as the pundits asserted, but because it was time for the Mother of All Bear Rallies, now almost two years old, to keel over and die.”  Of course, one can never be absolutely certain about such things, and that’s why I struggled briefly with the temptation to rephrase that sentence as follows:  “Stocks fell not because of fears over the spread of violence in the Middle East, as the pundits asserted, but perhaps because it was time for the Mother of All Bear Rallies, now almost two years old, to keel over and die.”  I’ll let my bearish call ride for now, however, because the market’s recent highs came within inches of longstanding, major Hidden Pivot targets. But I’m not going to chisel the prediction in stone as I did a “hula prediction” that Goldman Sachs would ultimately trade below $30 during the bank-stock  collapse of 2007-08.  Goldman shares actually bottomed around $40, and that’s why I am making arrangements, finally, to deliver on a pledge to don a grass skirt and dance the hula in Times Square in the dead of winter. I will provide further details shortly for those of you who want to witness this sorry spectacle.  The irony is that Goldman probably will trade below $30 by the time the world’s $800 trillion derivatives bubble has completely deflated. I’ve also predicted – no hula dance riding on this one -- that a $10 million co-op on Central Park West will eventually change hands for $250,000; and that the damage will